Catalina Crunch: Krishna Kaliannan. From Homemade Keto Cocoa Puffs to Breakfast Aisle Breakthrough Transcript from https://podmenti.com/t/9774d83dc2bde82a I happened to meet a friend in Central Park and I had told him that I'd been Trying out the cereal I was making and I and he could try some if he wanted. And then he Then mowed me for it. And I think he Venmoed me Like seven ninety nine or eight ninety nine, what looks like a grocery store price. And that's when it kind of struck me. Oh, you could actually make food. And sell it to people. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. I'm Guy Raz, and on the show today, how Krishna Kalyanin created a high-protein, low-carb breakfast cereal in his New York City apartment. grew it into a$100 million brand. Catalina Crunch. A few years ago, I tried the ketogenic diet, and for about a year I ate no bread, no pasta, almost no sugar at all. And I will tell you, it is brutally hard. Because once you start paying attention, you realize that carbs and sugar are in nearly everything. A bagel with cream cheese can blow the whole day. So can a plate of pasta, or for that matter, a bowl of cereal. Americans spend somewhere around twenty billion dollars a year on cereal alone. There's 60 feet of it in almost any grocery store, dozens and dozens of brands. But for decades it was basically the same stuff. Corn or rice, a lot of sugar, a little bit of color, and a different name on the box. Today's guest, Krishna Kalyanan, wanted to make something different. A high protein, low sugar, low carb breakfast cereal. That actually tasted good. And to do that, he had to work with ingredients that were barely known or were just starting to enter the CPG marketplace at the time. Things like pea protein and monk fruit. Those early experiments eventually became Catalina Crunch. a keto friendly brand of cereals and snacks that's now doing around$200 million in annual sales. Now one of the reasons Krishna became an early adopter of the keto diet was because he had to. He had type one diabetes and epilepsy. and he needed to cut sugar and carb from his diet. Krishna grew up in Orange County, California in the 90s and 2000s. As a kid, he played tennis and also became a competitive chess player. His dad, who's an immigrant from rural India, was a veterinarian, and his mom was a nurse. My parents were big on education, but they were also big on You deciding what you wanna do with your life as opposed to us telling you what you should do with your life. Um so My mom, I think, hoped for a while that I'd become a veterinarian,'cause it'd be easy to take over my dad's practice and then run that practice myself. But uh both of them were very were very hands off and didn't really say Oh, become a doctor or become a lawyer, anything like that. I mean, you know, your dad was an entrepreneur, he ran his own business, but y I I wonder if you if you ever thought of it that way. I mean, did you ever Yeah, some kids are are selling candy bars at school and and and running lemonade stands and car wash businesses and like did you do any of that stuff growing up? I did not, no. I did not do any of that stuff. I don't think I really contemplated starting a business, nor do I think I thought of my dad as a as an entrepreneur, to your point, even though he is. Yeah. Okay. Um A very sort of life changing thing. Happens to you. in the senior year of high school. And I think it happens Uh during a visit to Penn. Um, tell me the story. You got y you're a senior in high school, it's two thousand nine, and you are you're in Philadelphia visiting Penn. Why are you there? Why are you visit you're visiting because you're Presumably'cause you want to Go there. Tell me the story. Yeah. So I was uh Actually to step back, right? So a couple of months before visiting Penn, um I was Starting to feel thirsty a lot. And so I got to the point where I couldn't go through a whole hour long class without having to leave, go get some water from the water fountain and come back. And then it got to the point that I couldn't drive from school back home without stopping at a convenience store to buy a gallon of water and drink it on the way back. And so I'm getting more and more thirsty. I don't know why I'm getting thirsty and To me, drinking water is a good thing, so I wasn't too concerned about it. And then I got accepted into Penn and so I went to Penn for this kind of New student. Day. Um, and I got there with my family. We're staying in a hotel the night before this whole thing scheduled to start. We walk around campus. Um, and I I pass out. As we're as we're walking around campus. On campus. Yes, yep. Go to the emergency room and One of the first things they do is test my blood sugar. Find that it's over a thousand. And that's when they diagnosed me with uh with type one diabetes. So you were Seventeen? Yeah, probably seventeen at the time, yep. Um They don't have or we don't have a full, complete understanding of type one diabetes, but what we know is that something happens in the body, it triggers. your white blood cells to attack the insulin producing cells in your pancreas, leaving you with without the ability to produce insulin. It's wild. And so now you're diagnosed with this condition that you have to manage and you're about to start college and your parents are gonna go back to California. Man, that's a lot. That's heavy. That's like You are now gonna have to completely change your diet and do all these and you're on your own. Yeah, I mean luckily, you know, UPenn's got a great health system, so I got an endocrinologist there. Um, you get a dietitian that specializes in diabetes care as well. But yeah, it was a lot. My parents were always calling and checking in. What's your blood sugar, what's your A one C, how you feeling, that sort of thing. Alright. From what I understand. Not that long after you were diagnosed with diabetes. You had Another Diagnosis. Something else happened. What Tell me the story. Yeah, I was diagnosed with epilepsy as well. Um I had woken up in the morning, I was taking a shower And then I had a seizure. Um, my mom heard me. And then she called the the ambulance and I went to the hospital and was diagnosed. Wow, I mean there's a lot of There's a lot of obstacles you're dealing with, like from a young age. Um that's tough. But I think that that diagnosis of epilepsy actually was a hidden blessing for you, right, in in many ways. Yeah, yeah. I mean there's different types of of epilepsy, um, but to your point the the ketogenic diet was first invented, quote unquote, in the early nineteen hundreds, and it was For the purpose of treating epileptic patients. And it's basically it's low sugar, high fat, high protein fiber, low carbohydrates. Yeah, the idea is that your brain is using sugar or glucose to power itself. And so the idea is can you starve the brain of sugar and kind of reduce the I'd say the electrical signaling inside the brain so that you don't have a seizure or reduce the chances of having a seizure. It basically y you're you're trying to change your body from burning carbs as an energy source to burning fat. That's right. Yep. Um it's an amazing d I've I've I've done it. I did it for about a year and it's amazing. It's uh really hard. uh because you have to really be careful about keeping your carbohydrates to under like th thirty grams a day or forty grams a day and and And this diet it's as you say, was like introduced in the twenties to help people treat epilepsy and was found to be really successful. Um You were not I mean you even though you were diagnosed with diabetes You were still eating a lot of carbohydrates, which no one told you was not A good idea. Yeah, yeah, at first I was I was still eating a lot of Philly cheese steaks and things like that and all the all the bread that comes along with it. Um One of the reasons I actually went to Penn was When I was visiting a friend there, I noticed all the great food trucks in Philadelphia. And so I was very excited about all the different options for for eating on campus. But yeah, with with diabetes it's it's challenging, right? Um and then you start to learn, you know, as a diabetic type one diabetic, you're taught to take insulin in ratio to how many carbs you eat. And so if you eat more carbs, you take more insulin. If you eat fewer carbs, you take less insulin. The challenge, or I think the opportunity is, is If you eat more carbs and therefore have to take more insulin If you get it wrong in terms of the number of Amount of insulin you're supposed to take. You can end up easily taking too much or too little. And then obviously insulin is is It is or was relatively expensive. Um, so less insulin is is Less money, which was also very, very helpful for me as a college student. So w how were you eating? I mean, uh you know, were you focused on meat and and healthy fats and You know. Fiber? I mean, how are you just using the dining hall at at at college? Yeah, so once I learned kind of how my body responded to different types of foods, I started eating basically eggs every day for breakfast. And snacking on nothing but nuts. Um and so I started eating a lot of that. Um, and it reduced how much insulin I had to take by by a lot. All right, so you completely transform your diet in like around two thousand nine, and keto was still very weird then. Like it was not Like I'm sure your friends are like, Wait, you're doing what? What kinda diet is this? Like It was weird, right? People probably thought that your diet was strange. Yeah, definitely. Yep. Um, it wa it was strange and it was it could be a bit expensive as well. Um, but uh it worked for me and so I I stuck with it. Alright, so you graduate from Penn in twenty thirteen and and I know you worked for like a hedge fund in New York for for a little while. Yep. But I guess you stayed there for, you know, roughly a year and from what I read, you really wanted to become an entrepreneur. You want to start your own thing. And you tried, you had uh I guess an on sort of an online recruiting tool that you you try to launch and then a an online car insurance company, um and and and I guess n neither of those worked out, but it sounds like you really wanted to Do your own thing. You didn't want to work for somebody else. Yeah, yep. Um you know, I think there there's just kind of this night and day difference in my mind, at least, as it relates to owning your own destiny. And so I was I was all in on making something happen. Um so I spent some time Yeah, I was working on a number of different projects. I can't tell you or even remember. twenty plus different apps, websites, services, products that I probably launched. In the course of this And I had I had tried certain things that I was very familiar with and I I felt s more strongly about and I'd felt found other things where it's like, huh, it seems like there's a group of people that have this challenge, let me just go try to solve it. And so I quickly realized if you're gonna have the motivation To succeed. You're gonna have to really believe deeply in what it is that you're doing. I think that was a good lesson that I learned early on. Because otherwise when the going gets tough, you just want to throw in the towel and move on to the next idea rather than double down and really figure out how to overcome the challenge. Yeah. And you had I mean, you had two businesses, basically tech startups, right? Um Yeah, one was um recruiting platform, one was an insurance platform, but they were tech startups and w so It naturally you would think that you would try another one, another Sort of tech startup. Yeah, I mean I knew how to Right software. and build fully functioning apps and websites. And you can do that. without spending any money other than your time. Um and so I was very interested in that path. I actually to be frank, probably didn't spend as much time as I should have or could have thinking about Hey, well what industry might I wanna go into, what I might wanna do. I just knew I wanted to help people and I thought that if I could come forward with a product or service that helps people. and made their lives better, that they would pay me for it and I could worry if you know, the rest of it would fall into line after that. So what were some ideas that you were Muling over. Well so one of the more quote successful projects that I worked on was Uh Trump had been elected president. In twenty sixteen. And one of the things that came out of it was this kind of increasing Polarization in the country. And the idea that in social media You were being Fed information that That confirmed your pre existing beliefs. Yeah. And so I had started and built this uh Chrome extension. Um it was called Escape My Bubble, very straightforward. And it would insert into your Facebook newsfeed Articles that challenged your beliefs. Um That got widely Covered. in the media at the time. I think it was written about or mentioned in the New York Times and that drove Close to a hundred thousand sign ups for the for the example. And it was free. I mean How are you how are you gonna make money? It was free. Yeah. Yep. I didn't know how I was gonna make money. You were just getting signs, yeah. Yeah, I was just trying to I was I was trying to get a lot of people using it and then think about that afterwards, right? So I got a lot of press. Um and A lot of people signed up for it. Then the news media moves on and there's no more there's not as much talk around The bubble and the social media algorithm problem. And I kinda went into this valley where the the number of new people that were signing up every day had dropped way down. And I was trying to figure out You know, kinda what's the future of this thing. Yeah. It turns out people really don't want to read news about the other side. Yeah, yeah. I think it's challenging. I I got the increasing sense that I was Fighting in innate psychological bias or psychological Kind of hardwired into our brains. And it's so much easier to read things that confirm our existing views than to challenge them. Yeah, I mean it sounds like such a great idea, I mean, right, and and now t in twenty twenty six, I mean it's just it's th that c concept is just seems imp uh so unlikely. People are So f much farther away from wanting to Exchange ideas. in a rational way. Mm-hmm, mm-hmm. Yep, yep. Um I I should mention that from what I understand In the sort of as a in the background or as part of your life. You got we're getting into cooking and baking, right? Because of your diet and what you had to eat and You would Experiment in the kitchen just for you, I guess. Yeah, so you know, me, I think along with a lot of other type one diabetics Start eating the same thing every day. Because it's very predictable. Um, and so it kind of takes the mental load off of managing diabetes. So I think I had mentioned that I had start eating eggs every day for breakfast. Snacking on nothing but nuts. And then eat. Chicken breasts every day for lunch. And then I get some spinach and some other things like that as well. But it was largely the same food over and over and over again. Um Living in New York, you know, New York's like the food capital of the world, maybe, or one of the food capitals of the world. All the new, fun, exciting stuff tends to come to New York first and and and it's very exciting, right? Um so I'm looking at at all this stuff and You know, I can't eat any of it. So to your point. I got really interested. in the opposite, which was just meal prepping and it was just the same thing every day. But along with the grilling of chicken breasts, I actually got interested in in baking as well. And so You know, the the whole concept here is You have to do it. A a typical Cookie recipe for as an example. Um the idea is Take that recipe. Go out to G and C And buy some protein powder. And put that in place of the wheat flour. Go out and to Amazon and get uh, you know, kind of some alternative sweetener. Use that instead of sugar. Add some cocoa powder. And try to make cookies that taste halfway decent. Right. Um it's difficult. There's actually a whole science behind baking. And so You know, how the protein powder hydrates when you mix it with water. You know, if you're trying to make a dough, you need something that's sticky. So when you add water to protein powder, it doesn't necessarily get sticky. Now you need to replace that with something else which is gonna get sticky so you can form a dough in the first place. Um, so it was very intellectually challenging. to try to figure that out and try to make these things taste From awful to decent to pretty good to really good. And I guess at a certain point you decide that you want to try to make Like Breakfast cereal. Like a a ketogenic like something that you could eat. Which I mean I don't even know where you would start. Tell me what What you were think like how did that even That idea even come to you. So I had eaten a lot of cereals growing up. Cinnamon toast crunch, cocoa puffs. You know Golden Graham. Classic American staples, so to speak, that I think a lot of kids in the nineties ate a lot of. I also had really fond memories of going to the grocery store with my mom when I was a kid and kind of picking out the new stuff, right? I mean that it says like sixty feet worth of cereal in the grocery store. So you can eat and try a lot of different things. Um, and so I had craved that variety in my life and I had just gotten sick of eating eggs for breakfast. I had been eating it for such a long time. I'd eaten it with over a hundred different hot sauces and other s sorts of sauces to try to make it taste different every morning. But ultimately it's that same egggy taste with that same egggy texture, right? Um it's not crispy, it's not crunchy, and I've just gotten really, really bored of it. So you decide that you want to s see if you could in your kitchen recreate Breakfere. Yes, yeah. I was thinking in particular about cocoa puffs, that was my favorite cereal growing up. And I realized that the chocolatiness from Cocoa Puffs is coming from a combination of cocoa powder and sugar. And if you can take the sugar and replace it with something like monk fruit. keep the cocoa powder, you now have this zero sugar or low sugar. Chocolate taste. And monk fruit is an extract that doesn't spike blood sugar. It's like a it's a sweet it's like a miracle sweetener. It's super sweet, but it doesn't have the same impact on your on your glucose levels. Exactly. Sugar or honey or map syrup. Yeah, everything that you just mentioned is all You know, if you break it down in it scientifically, it's all glucose, fructose, sucrose, which are three of the most common sugars in food. So a lot of people I think think that sugar and sweetness are the same thing, but they're actually not. And they're actually other things beyond Sugar which give your Brain the sweet. sensation, right? I mean what we perceive as sweetness is really Kind of neurochemical. changes in in the brain. Um and so yeah, monk fruit has seeds. The seeds are extremely sweet, but They are not sugar and so they do not spike your your blood sugar. It's the same with stevia, which which comes from a leaf. Yes. Right. Um and I I just became enthralled with the The whole subject. opening a door to a whole new world when you Think of cooking as just follow the recipe and you get your food and then all of a sudden you open this Oh wait a minute. There are all these ingredients that You know, I would even go so far as to say humanity itself is not a spent a lot of time Or trying out And so it almost felt like Exploring something totally new. Okay. I mean cocoa puffs are puffed corn, basically. I think rice and corn, maybe some wheat in there, but it Um what w what were you gonna use to make your keto version of that. So I was trying to make something you know, I first of all I was rolling the ingredients into a dough. I was cutting the dough into squares. And again, this is pr what protein pea protein powder. Yes. Cocoa powder and Stevia or monk fruit? Yeah, yeah. The simplest form, exactly, it was those three ingredients. Um but If you mix these three things together with water You're not gonna get a dough that sticks together very well. And it's also gonna be very hard and very flat. And it's not gonna have a lot of crispiness to it. So you're also adding or I was also adding at the time baking powder. Baking powder. as you know helps things rise, right? And then when when they rise And so there's kind of air pockets inside and then set with the airpockets inside them. That's where you then have that structure that that enables the crispiness or the crunchiness, right? Yeah. Um And then yeah, you you take those ingredients, you mix them together, you form it into a dough. Just like you're making crackers, right? R roll the dough out into a thin sheet on a baking pan. Cut it. Into squares and then bake it in the oven. Okay. And how was it? Uh Yeah, well again, it was an evolution. It went from really bad to Better over time. I think the first one I made was As hard as a rock. Um you could not eat it. And that's when I started to realize the importance of baking powder to get it to rise a little bit. I also started to realize that Cocoa powder. is extremely bitter. It only tastes like chocolate when you add the sweetness to it and that the those two things come together. So I think the first iterations I made were Hard rocks that tasted like soil. When we come back in just a moment, Krishna finally makes an edible version of the cereal. And then names it. With a nod to Will Farrell. Stay with us, I'm Guy Raj, and you're listening to how I built this. Welcome back to How I Built This, I'm Guy Raz. So it's 2017, and Krishna is playing around in his kitchen, and he's trying to make something that tastes like cocoa puffs, but without all the carbs and sugar. I got it to the point after Meticulous. Tri and error. To where it tasted pretty good. I was eating it with almond milk in the morning for breakfast. It didn't send my blood sugar through the roof like Coco Puffs would, but it still tasted good. Mm-hmm. I happened to meet a friend in Central Park and he was Not diabetic. Um but he had gotten interested in getting more protein for breakfast and he was sick of eating eggs. And we were just we just happened to be talking about this. I don't think we had we had really planned to talk about it. And I had told him that I'd been Trying out the cereal I was making and I and he could try some if he wanted. So the next time I saw him I gave him a bag of it. And then he Venmoed me for it. And I hadn't asked him to pay me for it, so I wasn't expecting it, but it was nice it was a nice gesture of goodwill on his part. And I think he venmoed me like seven ninety nine or eight ninety nine, but he Venmo'd me a price that it wasn't like oh here's ten bucks or here's five bucks for this stuff. Here's like what looks like a grocery store price. And that's when it kind of struck me Oh, you could actually make food. And sell it to people. Now, I it's obvious to people that there are there are big companies that do this. I had not really considered that. I had just been thinking about Hey, I know how to make Apps, I know how to make websites. I'm gonna do something with that. Um and I I reflected back and realized oh I've been actually working on making a quote. product or a cereal product. But that was not the intention of it. Yeah, going forward. Alright, so so walk me through like How you got to a place where you were like, Okay. I'm gonna try and make a business out of this. I think I wanna Put all of my energy into this serial idea. Yeah. Well When I saw that my friend was not diabetic, yet he was also trying to eat a lot of protein for breakfast. I kinda put two and two together and realized Oh, there's not really many options in the grocery store that are a good fit. for people that that are trying to achieve this. And so That's when I realized, oh, there's actually a a big Need here that No one really seems to be meeting. Um, and so I walked through The grocery store. Serial Isle, which I hadn't been to in in probably a decade. Um, and it was exactly the same as I think I had found it when I was a teenager and had last been there. And It struck me that there's a lot of different cereals in the grocery store. But they're all Sort of the same cereal with different branding. Yeah. And and so that's when I realized, oh, you know That could be exciting. Um, and I think finally I'd come to realize That the obesity rate in the country, um and the rate of diabetes in America. We're both Through the roof. when you start to think about all the money we're spending on health care And the negative repercussions that can have for our country. I got really excited about it. It's like, hey, there's a big challenge here, but a big opportunity to help a lot of people. Alright, so you um you decide that you're gonna go pursue this, but um What was the first step that you did? I mean, um y you're making it for friends, right, and in your apartment. But This is a complex product. It's gonna it's gotta be crispy in milk or almond milk or soy milk. It's gotta stay crispy. and it's gotta taste good and it has to be healthy and it has to have low carbs and high fiber and high protein. That's a lot. I mean there's a You know, you've been doing some of these experiments in your kitchen, but Did you feel like I've got a I gotta get more training, I gotta get a better understanding of how to do this. Yeah, so it was it was an evolution. Um so there were a lot of mistakes I made along the way that that anyone who was in the food industry wouldn't have made. Uh but they were all learning for me. You know, I think the first one was I Didn't do the math, right? I looked at my oven in my apartment. And it has like five Layers on it. A racks. You really only ever use one rack. And so I thought to myself, Oh man, I could just make a bunch of cereal right in this oven. Once you do the math you realize that A sheet of dough doesn't really weigh that much. And so you're taking up maybe three racks of your oven just to make like one You know, kind of stand up pouch worth of cereal. And then you're baking it for a long time, you do the dough for a long time. You can really only make it in an eight hour day out of your oven. Maybe like five or six pouches of cereal. And I guess I should describe your serial for people who are not familiar with it. It looks like golden grams, right, for lack of a better description. It's It's sort of square that's sort of curvy. But um You were making it in sheets on baking sheets and scoring it and then sort of breaking it apart. So I imagine the first I'm I'm sure some of those squares were not Squares maybe they had like a A chip on him or something. Yeah, yeah. And You had a name for this. Cereal. Yes. Yep. I called it Catalina Crunch. From the beginning. Okay. Uh Catalina's Island of Southern California. I'm assuming that's the Catalina you're talking about. Yeah, I'd grown up in uh in in California and so I was aware of Catalina Island off the coast. Um One thing I did realize was that This cereal. was gonna be priced at a premium to other cereals on the market. And the reason for that was When I started to look at different ingredients You look at the corn flour and the rice flour and the wheat flour. That's down at like Ten to twenty cents a pound. You go to G and C and you get one of those tubs of Protein powder for like thirty bucks. You know, that stuff's like can be is way, way, way more expensive. Yeah. Um and so I realized Hey, I need to come up with a name. That that it it kind of has this premium feel to it, right? Um I wanted the name Crunch. Because I thought Like my snacks. And everything I was eating was was more mushy like eggs. And I was Craving the pretzels, chips, crackers, Cereal, the crispy, crunchy bite. So I want to crunch in the name and then I was trying to think of something that started with C that would kind of Go with crunch, so it would be like alliteration. Mm-hmm. Um Joe Bonnie, um is a good example of like, you know, it sounds premium, it sounds nice, it starts with a C Um, but I think that's like Italian or European of some sort. Cereal is a very American uh invention. Um and so I was thinking of something that was American and I knew the Catalina wine mixer from the movie Step Brothers. I really love the movie Step Brothers. I think enough people had had been introduced to Catalina Island through the movie Step Brothers. Um so I went with Catalina Crunch. It sounded good. It had a ring to it, um easy to say. I liked it. I'm curious, I mean Clearly you were you liked cooking, you liked baking, but this was not how people identified you probably. Probably people thought of you as a guy who was gonna start a tech When you started to talk to people. who knew you, maybe your family and others that you were like, I'm gonna Make a go at this thing. I want to see if I can turn this into a brand. Did you get any pushback from anybody? Was everybody super supportive? Um I I'm very lucky. I have a very supportive family. But It's definitely challenging being an entrepreneur um because an entrepreneur is like a uh adjacency to being unemployed. uh when you go from working at a hedge fund, right, where you're making a ton of money and you're kind of in one of the most difficult, demanding, and respected jobs in New York to all of a sudden quote playing around in these various ideas. There's pressure, quote unquote, from society. But no, my my my parents, my my girlfriend who's now my wife Um family. They were they were kind of I would say rocks in my life that that help me Pursue these things with confidence. And and you are initially going to so you set up a website. And you were gonna sell bags of this cereal. And what w the flavor was chocolate? Chocolate. Yep. And how did you market it. Did you call it a keto cereal? Ca still m a lot of people don't know what that means. Did you call it a low carb cereal, a high protein cereal? When I started out I was very focused on low sugar. because sugar in particular is what makes your blood sugar spike and go up and down and up and down. So I was very focused on the low sugar nature of it. It happened to be high protein and high fiber at the same time. And so people were eating it for a variety of reasons. And that goes back to something very important when selling something is is like you might put something out into the world for a reason and then people might buy it for a different reason and you need to go talk to people to understand that, right? Um but yeah, I was very focused on the fact that it was low sugar. How did you get people to be aware of it? Was it I can't imagine you just put the website up and all of a sudden the orders start flooding in. I'm assuming it was m just kind of friends and and friends of friends. No, actually uh it kinda was more put the website up and the orders start coming in. You know, one thing that happened was someone Found out about it. And then posted it. on a like diabetes type one diabetes group inside of Facebook. Um, and then like a hundred people from that group came and and bought the cereal. So we had a lot of what you would call gorilla marketing. It was a ton of really word of mouth, offline word of mouth. People posting about it on Instagram, Facebook, that sort of thing. Okay, so you you've got this and how are you making I mean How are you actually Fulfilling orders. Like let's just say you're getting ten orders a day. Is that is that about right? Um We quickly up to hundreds of orders a day. I'm assuming you had to start hiring people to help you quickly. Well, so we w so I went from The kitchen in my apartment to a commercial kitchen. And in the commercial kitchen I could make dough in bigger sizes, right? They have these Hobart mixers. So I think with like an eighty quart Hobart mixer you can make like I don't know. Yeah, thirty, fifty pounds of dough at at a time. And you were doing this. Yes, yep. And fulfilling orders. Yes. Yep. Okay, so but you had to hire people to help you, I imagine. I did not I just had my trusty wife on the weekends. That was it at the time. And So yeah, once again You know, you have these like Sheeting belts in the uh commercial kitchen. You got rack ovens now, right? So you can put whole racks of I've cut. Crackers, like you know, cereal. But this again, it's complicated because imagining You're cooking this at low temperatures for a long time, right? Or you It's not'cause you have to kind of dry it. It's not just like putting it in the oven at four hundred degrees,'cause it'll burn it. Yeah, yeah, yeah, yeah. I ha I can't remember exactly, but I think I had it in for like two seventy five at eighteen minutes, or you know, it's two fifty at eighteen minutes, something like that. Yep. And then put them in bags. Mm-hmm. And seal them. Yes. So this commercial kitchen was an industry city. It was very busy, so I had The last shift, which I believe was ten PM to five A. M. or something like that. So I was working overnight in there. And Uh, making the cereal, packaging it. And so I would go to to the post office by my apartment. With Tons of boxes. Drop them all off. Um and then and then kinda start that again. And sleep for what? How many hours a night. Yeah, yeah, I wasn't getting a lot of sleep. It was just a lot of it was a lot of work. Tell me what that felt like. I mean he you know, you're obviously a smart guy, you go to this elite college you get this sort of elite job out of college on Wall Street, a lot of your friends are probably already, you know. making a lot of cash in these different businesses you're now Four years out of college. And I don't know. questioning what you were doing? I was intellectually enthralled by the adventure. Um and I was I was very busy. So there were challenging times when I questioned what I was doing. But at this point. Like When you're getting orders coming in and you're seeing the orders come in every day, and then you're getting emails from people and they're loving what you're making It's like it's thrilling. It it's really exciting. Um I don't know how else to describe it, but you've you've just put something new into the world and people are telling you that they love it. And so That that was foremost on my mind at this time. I wanna go back to the ingredients for a sec because in in that first year of making it yourself and going you know, selling it. I mean w you were literally going to G and C and buying protein powder and g and and ordering You know. other ingredients probably through Amazon and just That was it. Yeah, I started ordering everything off Amazon, yep. Because the ingredients today are quite complex. I mean there's still pea protein and But there are other ingredients that are not so obvious, right, like corn fiber or ch uh P fiber or chicory root fiber that You know it's it's a corn, but it's qu it's a part of the corn that doesn't have as much uh uh carbohydrates and and so Yeah. to to get what you have today, you you've mixed all these things. But I imagine In that first year It wasn't so sophisticated. Yeah, yeah. So one of the things with the ingredients is I had Also wanted To have a lot of fiber. in the in the serial, if I could. And I had been using Almond flour and then coconut flour. To put a lot of fiber into the cereal. And one of the challenges with Fiber is if you put too much fiber into a The food. It becomes hard to digest. And that's when I started to realize, oh, there's actually different types of fiber. And each of these fibers can act differently in the digestive system. Um so I've spent many years trying to understand What combinations of fiber One, do I think are uh do I wanna eat and do I want my kids to eat and I think that are that are best, quote unquote, for my health. And then also so that you can eat a significant amount of it, but without having And upset stomach afterwards. This to me is. You couldn't do this in the year two thousand. Even in the year two thousand ten it would have been hard. But in two thousand eighteen you could get Pretty much. chicory root fiber and Yeah, you get powdered spinach. Like whatever you need, you could just get online now. Yeah, yeah, I mean it's fascinating and and you're absolutely right. Um and an interesting kind of s uh a side bit, but uh the you know, we talk about whole grains, right? So a a whole grain has the the brand, the germ, the endosperm, the entire grain. Right, like a wheat berry before it's ground up is is That's what you're talking about. Yes, exactly. Yep. Um and so it has all the protein, all the fiber and And all the starch. All in one. We started or the food industry started removing the protein And removing the fiber. As a way to make products Tastes better. Yeah. And so that was the first iteration of this was going from whole wheat flour And going from brown rice to white rice, et cetera. And so when you start taking out the protein and fiber so that you can get this isolated starch source. A it's a lot less healthy for you and there have been a lot of people writing about the problems with with that. But B Well where does the protein and fiber go? It's just being thrown away. Thrown away, yeah. Yeah. So to your point A lot of these new ingredients are actually byproducts of other ingredients. And you know, we talk a lot about food waste. This is an this is a way to avoid food waste by by reusing some of the most nutritious parts of the legumes, the lentils, and and whatever else. Yeah. I mean it's like Way. For a long time, Way was just thrown away. when people would make yogurt and then somebody was like, Wait, why don't we take it and Dry it, powderize it, and turn into a protein powder. Mm-hmm. Yep. So okay, so you're let's go back to to so it's twenty eighteen, you're working at the commercial kitchen. And Trying to learn about what's gonna make this better because I imagine like version one point oh that you're selling in twenty eighteen It's probably okay, but but I but probably not really what you wanted it to be yet. Yeah, so so what I was making out of the commercial kitchen, again, you know Trying to make it quickly. You're making larger batches now. Um and you know, there's there's variability in the baking process, and I'm basically only able to make so much each day. And so was kind of going through this in stock out of stock. Pattern on our website. Right, where Um we'd sell And then I'd have more orders than I could ship. So I'd turn it off. I'm and say out of stock. Then then make all the cereal. Ship it and then turn it back on again. And I realized that it was very physically demanding on me. And even still we weren't making that much cereal. Yeah. Um, and so that's when I went to Texas A and M. They have a um basically like a exec ed short course. On how General Mills and Kellogg's and Post make cereal. Wait. Texas A Mm that's Amazing. You go to Texas A and M and how long is the course? It was I I think it was a week. That's so interesting'cause I'm sure you know the story. Maybe you don't. But Ben and Jerry's Right. Ben and Jerry, they took a correspondence course in ice cream making it. Yeah, I think Penn State. And that's how they learned how to make ice cream. So Texas A and M is a serial making course, which makes sense, Texas A M. huge ag school. And so you fly there to college station for a week and take this course. Yeah, I mean you know, so I think the course to your point, Texas A M has an ag school. It's a lot of companies that maybe are thinking about getting into making cereal, and so they want to send someone from their company to understand how to make cereal. In a kitchen in this class. No, no. So in this class they have what they call pilot sized versions of the equipment that the that the bigger companies use to make cereal. Yep. Right. So like one of the first things you learn, for example, is in the commercial kitchen or in your own kitchen, you're baking in batches in this like standing oven, right? But in bigger food manufacturing. They actually have Continuous ovens, right? So you have like a conveyor belt. And it's just being it's like a Papa John's pizza, you know, they put in a conveyor belt and it just cooks the pizza, comes out, they put in the box. Yeah, yeah. Yep. So you learn about that. Um, you learn about equipment to package food products as well. And and you know. you go to into any modern food facility, they don't have a bunch of people just sitting there scooping cereal and putting it into into bags. They have they have scales and better ways of doing it, right? So I learned a lot about that. Um The other thing that happened in this world was Bars, you know, right? So protein bars became more popular. And an ingredient into protein bars is protein crisps. Which is Waypuffs, right? Puff. They have Waypuffs, they have pea protein puffs, they have many different ingredients. But those are also made on cereal making equipment. And you can think of Way Puffs If you added cocoa powder to them. You could think of them as Miniature cocoa puffs made high protein. Um and so as the as the bar market was growing demand for this same manufacturing process was growing and hence investment in it was growing. Interesting. I mean do people when the people you met in that course like you're doing what? Yeah, wait, you're Serial with what? Like I imagine the people running that program. May have to be a been skeptical of what you were doing because If you are teaching people about cereal, well cereal's wheat, corn and rice. Yeah, yeah, so hey, so cereal You know, it stands for cereal grains, right? Which to your point. You know, like corn is a cereal grain. So w what I was doing with the protein powders was highly unconventional. And so What was challenging about it was everyone I talked to No one said I was gonna be able to make the cereal that I was making it in large volumes. You know, they're saying that it wasn't gonna work for for one reason or another. But what you're doing again, I would think How I mean, if you're at this serial course and they're saying Yeah, what you're trying to do can't be done. At scale. Mm-hmm. I mean, game over. Those guys are the experts. Yeah, I mean uh You know, they're the experts. They're not geniuses. Um, and experts every so often find themselves in the experts' dilemma. Where they have all this knowledge But that knowledge becomes outdated over time. And so The world's moving forward. There are new ingredients. Right? So you talk about It being hard, but you know, a lot of these folks haven't tried some of these new ingredients we're talking about, like chicory root fiber. And and pee hole fiber and things like that, right? Yeah. Um so so yes and no on You know when everyone someone tells me something's not possible. My first question is is why is it not possible? And if I can't get down to the first principle's reason as to why it's not possible, then I then I walk away believing it's possible and and that we just need to do more work. When we come back in just a moment, Krishna puts in the work. and learns why Indianapolis is a really smart place to make cereal. 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 2018 and Krishna's selling Catalina Crunch entirely online and making it in a commercial kitchen in Brooklyn. But after finishing a course in cereal making, he now has connections that can help him make cereal at scale. I then met a partner, a company that specialized in do this sort of thing. Again, they were all already making crisps for the protein bar industry and and working on some some like baby cereals and some other more organic products. And so once I was working with them I could then make you know, rather than making fifty pouches a day or whatever it was in the commercial kitchen, you know, they could make ten thousand pouches in a day, right? Far, far larger quantities of it. Um But you know the thing is when you have this big equipment, all of a sudden it costs a lot of money to do the work on it because you need to buy bigger Quantities of ingredients and in the whole nine yards. So did you Raise money. Yeah, so so I had raised Over the course of two rounds, first a hundred thousand dollars, um and then eight hundred thousand dollars afterwards. Okay, and this is in twenty eighteen. Mm-hmm. Yep. And Uh who who were your investors? Yeah, so first investor was a good friend of mine from college. Mm-hmm. And uh um yeah, he wrote me the first check that enabled me to to do a lot of this work that I talked about in in making the cereal. And this co manufacturer, uh and you're back in New York. Yes. And so that's it. You're gonna work with this this this co manufacturer on making on scaling this. Yeah, so I went back and forth. This company's based in the Midwest. I was in New York. Um There were two things that were going on. One I wanted to make sure that it Tasted great. And that everything went According to plan. So every time they would make Catalina Crunch Cereal, I'd go there and watch them make it. Number two was They could make the cereal squares. But they could not package the cereal itself. They could only put the serial into the bag and box model if I wanted to do that. They couldn't put the cereal into stand up pouches. Which is what you had. You weren't using a a box, cereal box. It was a pouch. Yep. Yep. And I was You know, I for better or for worse, I was insistent on the stand up pouch from day one. The reason was I had spent a lot of time as a kid. the bag of cereal back in the box after I'd taken it out of the box and it got grown very frustrated with the bag in box. Also, if you open that bag up. You then have no way to reseal it. So you now need to go find a paper clip or something else before you put it back in the box. I thought the pouch is easier to carry around. It reseals itself'cause it's as its own zipper. You know, it uh to me it's just better. So they were making the cereal and then I had a second company Which was putting it into pouches for me. And then from there. I was able to to um take it and and ship it out to customers as they ordered it. All right. This is all happening in twenty eighteen, your first year in business. Mm-hmm. Yep. So this is a busy year. It w it was. It was a very busy year, yes. Okay. Late in twenty eighteen. You decide to leave New York City. And move to the Midwest. What happened? Why what was the catalyst for that? Decision. Yeah. So We had this company that was packaging the cereal into the stand up pouches. The owner of that company was a type one diabetic like I was, and so he was very passionate about kind of helping me with this. The challenge was is they are a very large company. They do Probably tens of millions of packages of food every day. Um and we are a very small company. So we weren't really a good fit from the go ahead. Yeah. And so eventually they kinda came to me and said, Hey We we're just not gonna do this anymore. Yeah. You're not you know, w your volume's not big enough. Our equipment's having problems putting the cereal into the pouches. We're done. Um, so that was probably the first time that I was really tr trying to figure out what to do. And So I basically Moved out to Indiana. and and started doing it myself. But you d there was no one else who could do it for you? There was no one else I could find that was a good fit. And just to go into a little bit more detail, there's there's three steps here, right? There's the making of the serial squares. There's then the tossing of them in things like cinnamon. or tossing them in cocoa to give a co a chocolate flavor, then there's the packaging. And so I needed a company that could toss it in the seasoning and then put it in the packaging and many of the companies that could do that. also had other some other sort of manufacturing process before it, which I didn't need. And they wanted to use. So You had to build your own production facility. Or was it a a turnkey operation? Like what w what did you have to buy a bunch of equipment? W and Why Indianapolis? Yeah, yeah. I took I took a big risk. Honestly. Um at least it seemed like a big risk in my mind. The'cause at this point When I couldn't find anyone else to coat and package the cereal That was the first time That I kind of asked myself Man, should I keep Doing this or should I shut this thing down? Um because I had I had emailed A million in one food companies. A lot of people are like you're too small. A lot of other people are like, We don't do that, or we can do this, but we can't do that. And So I was kind of thinking, All right, am I gonna stop doing this or am I gonna do it myself? And can I do it myself? Yeah. And I thought kinda like the hell with it, let's give it a try. Um I chose Indianapolis because It is somewhat close to the center of the country. And so from Indianapolis you can ship both to California and to New York in one week. So I've gotten I've gotten a little smarter at this point from back when I was making things in my kitchen. And I started to realize from buying ingredients, if you have your thing located in New York, you're paying a lot more to ship those ingredients, say from Chicago to New York, right? Where a lot of the ingredients come out of the heartland. than to just have your place right where the ingredients are coming from. And then if you're in New York and you're shipping your finished pouches of cereal, say out to California You know, that can be Two weeks for them to get over there on trucks. So I looked at different places. I ended up renting about a three thousand square foot space in an office building. in Indianapolis. And I basically moved into that. Building. bought a uh like a cot off Amazon, set it up in the office. And then I would do the cereal in the back. And what does it mean? Did you have to buy like huge mixing bowls to like Cinnamon and cocoa. doesn't sound that complicated, but if you're talking about large volumes of cereal I imagine you need You know, like I don't know, w what do you need? Yeah, yeah. There's there's a few different ways of doing it. When I started I I was li thinking about it and was like, Hey, I just need something that's gonna turn around. And then I can put the cereal into and it'll kinda spin around. And then I can put the cinnamon in into it and then and then mix it all together. Right. And so I actually started by buying a washing machine. And just not turning the machine on and just having it spin. And then having the cereal inside of the machine. And so that was the first way that I was getting The cinnamon and the chocolate onto the cereal. Okay. So you are um in Indianapolis. Just grinding away, sleeping in the Facility. And give me a sense of like what what your sales were like overall in twenty eighteen. It was probably a million dollars or something like that. W in your first full year? Yes, yep. That's a lot. Yeah. I g I mean I I think it's crazy to say it, but you know, social media connects a lot of people together. Um also had hired uh a marketer. And this guy was also obviously instrumental to helping with running ads on Instagram, running ads on Facebook, basically getting the word out. Okay, I imagine that that you are Um You've got a D to C business. And was that sort of the direction you w you wanted to head towards? Like did you think that D to C was the way to go, or Obviously you would eventually get into retail, but was that Even on your radar at all? So D to C was the way that I wanted to go. It was another thing that got me interested in starting the business in the first place, as I was starting to see lots of stuff was being sold online. There was Dollar Shave Club as an example of a company which had kind of gone outside of the usual retail channel and had grown really quickly. Um I realized after some time That we weren't gonna sell To the entire nation online. When you're selling sunglasses as an example, if it's like a hundred dollar pair of sunglasses and it costs like seven dollars to ship'em. So the consumer, you know, that works, right? But when you're selling a a bag of cereal for seven dollars and then you're spending seven dollars to ship it to the consumer, that doesn't work. Um and so That's when I realized, okay, if we're gonna get Really big. We gotta be in the grocery stores as well. Yeah. Um We went into whole foods first. Whole foods it actually just moved from region by region buying to what they call global buying, which was basically one person that buys Serial for the whole country and puts it into every store. And so in twenty twenty and January, I believe. We got the cereal on shelf at all whole foods across the country. Well. To create awareness at Whole Foods. So I I think within six months we became one of the top selling cereals at Whole Foods. Well. If not the top selling cereal at Whole Foods. And the reason that happened is I think a couple fold. In twenty nineteen or so. Keto became very popular. Yeah. Great buyer there at Whole Foods. She was very excited about what we were doing. And she said Hey We wanna take your cereal, but we want you to change the packaging so that rather than saying low sugar in big letters, it's gonna say keto friendly in big letters. So I then made that change. Um We'd been selling direct to consumer Mm. you know, close to two years or so at that point. And so we had a lot of people that knew us. But again, because of the cost of shipping online We were selling four packs to people online. And it was relatively expensive. It was like forty nine dollars for four pouches or something like that. When it was at Whole Foods. It was like eight ninety nine for a pouch, which was a really good price. So one of the things that is challenging, right, especially with the food business, is the fluctuation of prices, like cocoa and Yeah. and and different ingredients. Um That are affected by you know. Like like the Ukraine war affected sunflower oil. Right. And um you know, the uh pri price of cocoa is skyrocketed, I think, in In recent years. How do you manage those fluctuations and then But you gotta sell the cereal for the same price. Yeah, that's it's been a it's been a really big challenge. Um, not gonna lie. Um the the prices of these the you know commodities as they call'em, right? You can go online and look at the price of sunflower oil and see a graph of it over time on Google images. And you'll see that when the s when the Ukraine war when Russia invaded Ukraine the price of sunflower oil skyrocketed because I believe Ukraine and Russia are two of the largest Growers of sunflower seeds. So Um yeah, you you occasionally have These major spikes in prices, which can threaten Basically your whole business model. Yeah. One thing that that I feel proud of is We have worked hard. To work around Those spikes? to avoid having to increase the price of our cereal. Um so You know, a lot of people complain about shrinkflation. So another thing you can do is you can say, Alright, the price of this has gone way up. Let's reduce the amount that's in the back. We have never reduced the amount of cereal that's in our like say pouch of cinnamon toast cereal as nine ounces today. It was nine ounces when we started the company. So One, you try to find new suppliers from new regions, right? Like yes, the the Dominant. supplier of sunflower seeds is Ukraine and Russia, but that doesn't mean that literally a hundred percent of the the ingredients are from there. Um and then two, you try to make changes to your recipe when you can. Right. So we had due to the tariffs on on uh China. The price of of monk fruit went way, way, way up. And It was like an extra eighty five thousand dollars a pallet for us to buy. It was a crazy increase. Um And so yeah, you're you're we're now working on like okay, how can we make the cereal taste sweet? But use a little bit less monk fruit. Um so there's no one solution. It depends on the situation, but you're trying to pull those levers to keep your Cast in check. So serial was uh I mean it it Was your sort of main product, right? And but I I think pretty quickly, like within two years, right? Launch in Whole Foods twenty twenty. Roughly, right? And I think the next year you expand out, so snack mixes and cookie bars and cookies. Um so the idea is, hey We can be a snack company. Mm-hmm, mm-hmm. So when I started the company I was taking the cereal I was making. Mixing it with almond milk and then eating it out of a bowl for breakfast. Right. Going back to talking to consumers to understand Why they love and are buying what you're selling. I realized that a lot of them were actually snacking on our cereal rather than eating it as breakfast cereal. And then I see people writing in to us, writing letters saying, Hey Look at what Chex Mix is doing. We'd love for you to make a snack mix. And I realized, okay. We can Take our same cereal squares, mix some Cashews and almonds in with them. And then Uh we can Toss that in a you know, call it a a a Parmesan garlic seasoning. And that's a snack. So the business really starts to grow and you're in Whole Foods and I think Costco, you guys also uh got into Costco pretty early on. Yep. Um And In twenty twenty four, I think um you uh You brought in a CEO. Doug Barrens to run the company. And tell me what I mean, you you you know, you started this, right, and and and And it was scaling. And so tell me what your What that freed you up to do. me to do really is one, focus on nutrition. Basically nailing Protein, fiber, and sugar. That's like The the biggest three things you can do, right? I think people should be eating more protein and more fiber. I think very few people eat enough fiber. Fiber and protein actually work synergistically To help you feel full and stay feeling full throughout the day. Um so If you ask me like what do I think's coming next and how can people kind of make a step change improvement in their eating. It's Not just protein. It's protein and fiber. When you think about You know, the journey you took and and the failed businesses that you started and then this thing, which is a complete left turn. And then it really grows really fast. And it's I think you know, you guys are m are are doing more than a hundred million dollars in in sales, maybe even higher than that. Um How much of your Of of where you got to now. And the success of this of this product and brand do you attribute to the to the work and the grind you put in, how much do you think it had to do with luck? Oh man. Um I think it's a lot of both. You know I I talked to a lot of other people that have started successful businesses. Um there's no school or course or training that you can go through to basically prepare yourself to quote be an entrepreneur. You just have to do and then learn and do and learn and do and learn. You know, it's funny, I I was reflecting the name of your your podcast is how I built this. But it's really how we built this. Me, but it's It's the retailers that support us, right? That enable us to get our products out to consumers. It's the ingredient vendors. It's the early investors as well as well as other investors that have given us the money that's enabled us to get the equipment and you know, now we have a Hundred and twenty five thousand square foot facility. in Indiana, much bigger, does much more volume. Um, again, have had some great mentors and advisors along the way. You know, and then and then just having a family, a wife that are kind of like a rock and that have helped me see it through to the end and not not go crazy. Um you know, again, it's all it's all luck, it's all being in the right place at the right time. That's Krishna Kalyanin. founder of Catalina Crunch. 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 as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyroz.com or on Substack. This episode was researched and produced by Chris Massini with music composed by Raptina of Louis. It was edited by Neva Grant. Our audio engineer was Quacy Lee. Our production staff also includes Alex Chung, Carla Estevez, Casey Herman, JC Howard, Sam Paulson, Catherine Cypher, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Roz and you've been listening. To how I built this.