For Wunderkeks, It Really Is Go Big or Go Home

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Hans sh explains why he's pursuing a deal with Costco and why his vision is to get Wonder kek cookies into every supermarket in the country when Jay gz counters that instead of thinking big or thinking small maybe Hans should think medium Hans says that may no longer be possible with consumer packaged Goods the little brand that grows and thrives by growing little by little doesn't really exist anymore in this space he says underlying this discussion of how fast Hans wants Wonder to grow and how quickly he wants to exit are the stress related mental health issues that he's discussed previously on the podcast and the fact that his partner Louise is in the US on an entrepreneurial Visa which means that if the business were to fail they might have to leave the country even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations brought to you by our principal sponsor the great game of business will let owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report which ni magazine named the best newsletter for business owners and which you can subscribe to for free at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are regulars Jay goz CEO of the gos group whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home and Hans shy who is co-founder of Wonder an e-commerce Bakery based in Austin Texas the episode is titled for Wonder it really is go big or go home but before we get started I want to play a snippet of an interview I did with Logan Airi who is the owner of 417 magazine in southwest Missouri this is the first of a series of interviews I'm doing for our sponsor the great game of business the interviews are with business owners who practice open book management because it's more common for say manufacturing companies to open their books I asked Logan if it was clear to her and to the great game folks that opening the books would work for a magazine here's what she told me no and I don't think it made sense to them either they were amazing as sitting down with us and saying okay we might have to we might have to really think completely differently about how you set up a scoreboard and yeah we don't have inventory and we you know we are a service-based business in a lot of ways but our coach was amazing and we just we figured out what worked for us and we stayed really really true to the game it wasn't like we made up our own game but we kind of used the spirit of the game and a lot of the principles and just figured out how to make it work for our business business and I don't know any other magazines that play the game I wish they all would because I think trying to get your head around paper and page you know quantity of the size of the magazine and all of that we definitely were always just guessing and now we have it the system down to where uh we're just as efficient and profitable as possible because we understand our metrics so well so for me playing the game was really about multiplying the brain power we have a lot of smart people that work there a lot of creativity and I just like multiplying the brain power and getting everybody's thoughts and ideas on how to most efficiently and profitably run the business can you give me an example of how it changed the way you manage the business what was different once you implemented the great game simplest way to describe it is we went from reaction to forecasting and living in that reaction mode is so an iety ridden and you're looking at your financials at the end of the quarter or the end of the year and you're thinking huh I wonder why that didn't go the way we thought or oh I wonder why that's so much better than we thought and all of our plans were just kind of based on what we had done before and what we thought we might do next time and now we're always looking way out ahead and then we're making plans for where we want to get rather than where we thought we ended up if that makes sense so I think that that's the biggest game Cher and you know we had been playing the game for a full year before the pandemic hit and I can get emotional anytime I think about it I don't know how we would have survived if we hadn't already been playing the game and had such a good handle on our business so that we were able to weather that really successfully better than I thought we would obviously when it all started at the beginning um so yeah I think it changes it from reaction to forecast you can read a text version of my entire interview with Logan Airi at 21 hats.com and now on to Today's [Music] Show welcome Jay and Hans it's great to have you here Hans we haven't spoken in a while uh but I've been following you on Twitter where you're quite active it sounds like uh you have a lot going on including something with Costco can you tell us about that when we first got approached by Costco last year we were definitely not ready we're very excited but I think it was very smart that we said no because at first we were scrambling like we're gonna get this together we're gonna put it together right now I don't care what we need to do and then we said like you know what Costco is going to be there in a year or so we're going to figure out what the right way to do it because it's the type of thing that if you don't do it properly it won't succeed one and it will really eat you alive too so we slow down and then we kept building we kept working on figuring out like what the right approach was and we actually heard from them again a couple weeks ago okay now we are getting there we're not there yet but we have a clear action plan of how we are approaching this and they were like you know what we really love what you're doing we really want your brand so what we can offer you that we can go at your pace let's try some Road shows uh in the summer see where it goes we can then do 10 stores then a few a few more things you don't have to because what the worri is the worry is like oh my God what if they then they say they want you in 500 stores we cannot support that and they say like yes we don't want to do that because we know how it ends for companies so we're being very mindful of that but we're working towards being in 10 Costco stores in the in the summer in California hopefully that's still even 10 stores that must be a significant uh ramp up for you I would think yeah no it's super exciting it's and it's a a great opportunity like in a small scale to test out what works what doesn't and then say oh okay so this work very well so now let's do 20 let's do 50 but at a pace that we can support I think that the worst mistake that you can do as an entrepreneur is and I think we all do it sometimes that you run before you walk so where thankfully we have learned that lesson if you're selling it to somebody for 20 bucks how much you charge on them we are still in the process there but the margins are quite slim particularly because they carry similar margins to all retailers but they they demand lower prices what Costco wants is for them to have the lowest price in the market so you can do it different ways but the margins are very slim like I think one of the mistakes is that particularly in food the margins are nothing you're going to be making pennies on every box of cookies the thing is the price is in volume but it seems that you're business is not a volume business I mean how how does that work that you're going to go on this treadmill cranking stuff out for a small it's not like you're Nabisco and you got some big machine you turn on and it just spits the cookies out all day long it just doesn't seem to fit your business model actually no like that that has been what has been what we have been working towards that's where the real potential is and uh obviously we won't be making the cookies ourselves we're actually working on uh finding co- manufacturing partners that actually can do that like literally they they do I I cannot but they can turn on a button so it's a long process it's something that you want to be very mindful of and really get to know them and feel feel comfortable but it's doable like it is in the current environment it doesn't make sense for I don't think for any company any startup at least to say oh we're going to snc five or $10 million in a production facility so manufacturing is a way easier way around that okay that makes sense sense you're going to go to somebody who does the mass manufacturing and then the second question I have is because I did a little research on it Costco according to what I read on some websites they don't want to be more than 20% of your business did they bring that up to you is that is that true yes they're very they're very clear about that because one of I mean there's always the horror stories that you hear about this company that bet put all their uh EGS in the Costco basket and that is a mistake because what they want is for people to get excited that I I can get the bigger pack of this brand that I love at Costco that's part of it and the other is that it is a risky business like putting every single thing you have in a retailer is very risky and I think one of the mistakes Founders make is that they really get excited about this deal and in yeah I mean we have all done it where we fantasize in a spreadsheet and then the reality the product is not moving at the speed that they wanted so the last thing that a Costco wants at the end of the day is that the stories oh Costco basically shwed us and sped us out which is the way a frustrated founder will frame it so they're very mindful about that and I frankly find that very healthy I wouldn't wanted myself s fighter I want to be very careful about how I approach that because you don't want to become then um at the end of the day Costco is a discount retailer and you don't want to be a discount brand either well as a faithful Costco Shopper I have to say they have good stuff there I you know they can call themselves discount all they want but the brands they have are they have solid stuff there so I don't I don't as a as someone who shops there I don't see a product there and think oh they're now if I saw it in Walmart that's another story but they're not Walmart I it's very in my mind at least they're not Walmart no what I mean but what I mean is this you go to Costco for the deals and the only way you have a deal is if you have a comparison so if the product that you find at Whole Foods or at HV or whatever your Supermarket is cheaper at Costco the only way that you will perceive those couple dollars less is if you actually know what the price is outside so if you're just a Costco rent then there's no point of reference yeah let's take a step back and talk about the conversation with Costco I'm curious you make a number of products I we've talked mostly about your cookies is this a a cookie deal or are there other products involved this is for the cookies we've gone coming back and forth about that and what makes sense is to get our food in the door for retail with the cookies which is the product that we are known for so our vision for w is there is a gigantic opportunity in desserts in general particularly frozen desserts which incidentally I think Costco would be the right partner for that but we are known for cookies so it's going to be a way easier conversation to have all these amazing cookies and so far you've been making all this yourself right you haven't used the co-manufacturer to this point correct yeah we're going to start working with a CO manufacturer very soon but for another project and what's that like does are you concerned about the quality uh of the product how do you monitor that at the end of it's a reputational thing one of the things that I have been doing and we' been very actually we're going into skew which is the top cpg accelerator we start next month it's a reputational thing as with everything that you can have the best advertising everywhere but it's a reputational thing and you want to talk to people and we have talked to a bunch of people who have done that and so we had a few recommendations because there's this list that everyone has is going around people are trying to be helpful and they will for reward you a list of 500 cop Packers and it's absolutely worthless I might as well just Google it so it's really like hey you person who successfully grew your brand to a billion dollars uh can you share with me what kind manufacturers are good like who do you know in the industry is good so we you have to hunt them down and if you expect that it's going to be a short and easy process and you're just going to be like a mail order thing that's definitely not going to happen so first you want to see if you feel comfortable with these people then you want to know what their expertises and then you want to really see that you're on the same page about what you expect from product because it's not the same thing to make a premium cookie like ours than to make Oreos those are two different sets of capabilities sure so that's very important and then it's just samples come and go and you have to go and see the facility and understand our produ and be very specific we have made our cookies ourselves we have baked about five million cookies so far like we know our product inside and out so for us it's very easy to speak the language of the manufacturer we know exactly what we want we know how to ask for it we know when is not I can tell just by looking at a cookie I can tell that it's not the cookie I need so I can say okay this sample is going back so why did they come to in the first place do they like your advertising do they like your social message they just like the cookies I mean how did they find you they found us because there was this piece on the local Fox affiliate uh actually nominated the piece for an enemy about us they came to our house and bake cookies with us and it was about about the message that we're doing about how it has evolved and I don't want to praise myself for anything but we are kind of the American dream in a way that we came we're immigrants we built this out of nothing we will this into existence and that is a story that really resonates in general for different reasons in different parts of the country so the story was about that and about our idea of how do we use that because what we say and this is like a very seminal part of our company we left our country and came to Austin looking for for own safe space and we found it and we're very thankful for that so that is a message that people want to hear and they saw that and they reached out they got really excited and then it turns out that they did try the cookies they order cookies they tried them they tried a lot of flavors we don't know like they just order them on the website and they got excited about like there was a match between the quality of the product and the excitement that we were building because this is how I see it people will tell you oh but cookies is a super crowded category that is true of every single category at least in food because frankly Americans don't need any more Foods we have enough beers in your Selzer sauces meat you name it so the way you engage and the way you break through the noises how do you get people to care and I think we really hone that formula very well did Costco tell you that did they tell you that the social message was important to them oh yeah yeah they were super excited about it no that's why I asked I thought that might have I doubted it was just oh they happen to eat your cookies and they thought they were great cookies I'm sure they did but I I figured there must have been more to it so that makes sense the cookies are fine the cookies are great I love them but I'm pretty sure that the guy next door can make cookies just as good and that's something that as a Founder you need to put yourself in that mindset because it's very easy to be so enamored with your product and say oh my cookies are the best and my cookies are going to change the world they are not the way we see it the cookies are the vehicle that you use to tell the story not the other way around if you want to talk about how amazing your cookies are you're dead in the water because frankly no one cares Hans did they put you through any kind of test I mean what did do they make you jump through any Hoops do they vet you they request an insane amount of documentation financials uh no uh at some point that's going to be part of the conversation but I don't think I don't think right now it is mostly what they are concerned is about quality assurance but so that is something that you need to get from the EO manufacturer so I have to assume that that beyond the cookies they're going to want some kind of signage or packaging or something that gets the story out there a little bit because without that I don't you know your cookies in an aisle did they talk to you about that they leave that up to you but that is what we do that is what we're good at so of course they want it but at the end of the day uh and I and I really like this about about the approach is we can give you the space and we're not going to tell you what to do obviously we have some guidelines then you get the sandbox you get to play it but it's up to you how you want to present your product we trust that you are the expert that is one of the the toughest parts and the toughest decisions to make how do we convey this because you know what the mistake a lot of Brands make and I'm no expert and I don't I haven't been there you know a lot of Brands tend to stop selling once you get the box through the checkout and they stop selling and there's nothing more disappointing than when you open these boxes and they're kind of depressing on the inside particularly with swits I think swits is a category that really lends itself to like packaging and like the excited because it's always a treat no one is eating candy for nutrition both Brands stop selling at the check out and I think that's a mistake the way we see it and the opportunity for uses we have an e-commerce business and what we want is for the people in the eCommerce side to get excited about wow these cookies that used to take a couple days to arrive I had to especially for special occasions now I'm going to be able to find them at my at my local Costco this is amazing and you want the people who are finding a Costco say oh my God this is amazing I want to engage with their socials I want to learn about their story I want to learn about their Foundation I want to be involved I want to share this with my mom who lives on the other end of the country so those two things need to be related and I don't know if it's because we're very well positioned for that because e-commerce has been our thing but if you get people to get excited to move from one side of the equation of the other and think of your customer not as the e-commerce customer and the Costco customer and the whole food customer as different people but you think of them at the same person the same Persona if you will wearing different hats that is where you can really make magic happen so Hans if you're responsible for your own marketing and it sounds like you primarily will be what does it mean to you to take on a 10 store responsibility in California how big a geographic area is that and and how much awareness do you think there is at this point uh of your brand there's awareness I guess is very little you need to be realistic like we're tiny and we're going to be sitting next to Oreo or whatever so uh the plan is to start doing what is called a road show so they give you space and you got you get your own little your little little station so you can sample that's super important sampling like that is the delivery method Costco sampling sampling sampling sampling and you can get people excited by proper training the people who are going to do the sampling but that's super interesting about Costco Costco is a place where you go to discover things you're always looking at the new thing it's very different to find something new at your regular Supermarket which is super crowded Costco has three cookies three types of pie three types of cake whatever and people go there with that Discovery idea in mind so it is a lot for many people it is exciting to go to Costco have you noticed that they move stuff around a lot that's because people feel like they're like oh my God there's this thing and if I don't get it right now may may not be here next week and people do that so it's not really about just putting the product in front of the person it's about putting the product in front of these people at the right time and if you're at Costco most likely you are wearing your brand Discovery hat if you will in a different way that you would go in a convenience store for instance are they going to allow you to put something in the package that basically says if you want to order these for friends or for gifts you can go to our website or are they going to try to stop you from doing that no they don't they have no say I mean they will reject something that is out of guidelines but that's perfectly fine that is at the end of the that's what they want they want that what they want you know what the Costco business model is like they have super super low margins I think it's 17% I read yeah but they um their money is made on of memberships like that's the money maker there so what they want is for you to get excited about going to Costco and to get excited about paying for your membership of course they want the volume they want to move product that is important but the thing is that realistically Wonder cakes I love my company but it's not going to move the needle for Costco it's goingon to move the needle for me but not for them what they want is they want you to keep coming back they want you to keep getting excited they don't really care if you are buying cookies or Coca-Cola or whatever they want you to be excited like frankly when I go to Costco I am excited like oh there's going to be some fun thing that I may discover here that is the mindset and that's what they want so the opportunity for me is a gigantic opportunity to put stuff in there for them it is more variety that they can offer to people who are willing to discover brands with you so of course they want it they want to feel excited and they want people to tell their friends oh I discovered this amazing brand new C CCO that is like in their DNA it makes sense the fact is 95% of what they sell is just you know Sherman toilet paper and Bounty towels and Hines ketchup it makes sense that they want whatever 5% of what they sell 2% of what they sell to be a new exciting Gourmet is kind of product so Hans obviously this is a big opportunity are are you prepared to seize it or do you need financing to do this yeah we need money to make this happen this has been kind of an interesting an interesting time because I mean I think we've been raising money ever since we met and it has been a fantastic opportunity to really understand the role of financing and capital and depth and you name it like frankly how many works and in what context and I'm really happy that it has been this super long winded process because I don't think up until very recently we had really our finger on the pulse of what we needed to do and what we were doing so the question I have totally on the entrepreneur side what do you have a goal like I want to sell in five years you at some point I believe said you want to build a billion dollar company okay they have medication for that and then now it's about social I'm trying what is your goal actually that's part of the fascinating conversations that we've been having in the past few months and this is the thing this is this was the tricky part and I I really appreciate that you're bringing that up because that confusion was really permeating and is not that we were confused is that we were not really conveying what we were doing and what was happening was this we got investors saying I love what you're doing your values your mission your brand this is amazing but how does this make me money which is a fair question and then we got people who were like more on the impact side I love what you're doing it's amazing I love the mission I love the values but how do I know that you're not just doing this for the money which was really a a valid question so we sought to figure that out because it was really hindering our efforts on both sides of the thing and I think a lot of Founders particularly in CBG I don't think anyone in cpg gets in it for the money we all get into this because we're excited about wait explain to people including me what was it cpg oh sorry consumer package Goods okay yeah sorry but anyone who gets into food food is a very rough business and a lot of us get into it because we're excited about what we're doing in many ways in our case it's about the specific values that we're trying to convey to the world but it doesn't have to be that but there's something there's passion there somewhere and what we found is at some point they will collide with each other like the mission and the business are going to are always going to be in opposition to each other for that's that's their nature so what we figured out is how do we do this and how what is it that what do we want because the work that we're doing Louis and I about building safe spaces about inclusivity about intersectionality is amazing I'm very excited about it is what I want to leave the world I really believe that you need to leave the play better than you found it which is amazing is lovely but why the hell would an investor care which is absolutely Fair okay correct me if I'm wrong it seems to me you've got three goals one is you'd be naive and crazy to not want to make money because you do need to make money and live so you want to make money you've got a strong social thing you want to do something that will leave the world a better place okay great and the third one which also is from listening to you is correct me if I'm wrong you'd like to not be stressed out isn't that true wouldn't you like to not be stressed out yeah that's where the money comes okay well so I I those three things do dictate a certain strategy here and I don't know that chasing investors all the time is going to take care of the stressed one yeah I don't need to think that big so I came I my phrase is I want to think medium I don't want to think small I don't want think big I want to think medium and I would suggest to you thinking medium is a good place to be doesn't have to have the stress and you still can make enough money and make an impact and the question is is how do you do that and so my next question would be have you drawn A Line in the Sand and said okay I will take an investor money but I will never give up more than x per. nope actually is the other way around what we figured out is that um we want to continue our work long term for the next 30 40 years on safe spasis and in order to make that happen yes I want the Financial Security if you will I don't think the stress is going to away but definitely the Financial Security I do want I do believe that the way we position this and the way we launch this into the world is with the cookies and I think that's very valid to say I'm going to think medium siiz I really am excited about this being big I want this in every single supermarket in America because that is what I want for myself that is the satisfaction that I'm looking for but that is a very personal thing but yeah I haven't been chasing investors all this time because I have really found myself like this is not working we're going to refine it and we're going to refine it not just for the benefit of the investors we're going to refine it because we have limited hours in the day so we need to really focus and really know what we're doing so what we did was we decided to split it so we have our company wonder and we launched the uh Sunday afternoon Foundation because what we what we realized was that the problem was in trying to use resources for impact that were meant for business and that is a mistake and the same way the other way around as well you cannot use your mission as a as a lever to make money because then is not a mission then is just a tool so what we is we launched the foundation and what we found this and this was very serendipitous but we really found the right crowd I guess where we started understanding there's a whole world out there of resources available for us to accomplish this thing and the cookies are going to help us because the cookie company gives us credibility it puts us on the stage I cannot tell you like how much we realize like how big this can be not in the sense of how many million dollar is's going to sell for when he sells and definitely our goal is to exit the company we want to exit the company in the next five years that is what we're building towards I don't see myself Bing cies for the rest of my life but I want to keep going with their foundation and what we're thinking is there's a whole world of resources out there that we can find and we can use to build what we're doing and for instance we had a meeting with a very very very big company about the foundation we got a verbal commitment for support they're going to give us a nice trink of money they don't care about my cookie company frankly they are very excited about these guys in Austin who are really doing this thing and they're everywhere people are talking about them but in that same meeting there was their Global food program manager and he got very excited too I have never been able to get that meeting as a cookie company they really don't care so we're moving in that direction and the opportunities are there because the world is just so much bigger let's come back to the opportunity at hand for a moment you told us that you've learned a lot about uh investors and you've taken a lot of time to talk to people and figure out what's what makes sense for you can you tell us more specifically how much money you need to raise for this Costco opportunity and and where you hope to get it it's a tricky conversation because what we decided was we don't know what we don't know so that's why we're going to the accelerator we need to fearure exactly that and what we think is it's not fair to go to an investor and ask them hey I'm going to need a couple million dollars but that may not be enough and I may be able to pull this off so we're not there yet we don't have the certainty and of course there's never going to be 100% certainty but I can tell you that there are many variables that I don't even know about yet I'm building my team so that we can really work around those and really be very mindful about the next step so their answer to that is we don't know it's probably going to look like a lot of a lot of money but it's a very different proposition if I have the team who is going to execute The Branding plan the co- manufacturer with the products already done I have figured out my packaging I have figured out my Logistics logistics for instance is something I really don't know nothing about and I'm at the point where in order for a company to grow is not up for me to learn it's up for me to find the right person to do that for us so that's what we're doing so yeah we're I mean we're raising money in a kind of passive way because we're going to need a lot of it later but we are not at the point where we can say oh this is what you can expect in black and white and until we get there then it's really not fair to ask for an investor for money so what we're doing is like okay we're going to take our time because that's the thing cost is going to be there later so it's Walmart so it's anyone I thought you said that the goal was to try to do the Costco thing this summer did did I oh yeah yeah that's pretty close summer after the accelerator is done and after we have a absolutely Clear Vision of how we are going to execute it right now and this is the tricky part it is very excited that Costco is reaching out and if you're not prepared it's going to kill you so that's what we said in the summer we didn't say oh you can do it tomorrow we're and we're summer I'm thinking late summer probably is going to be August or September tell us about the accelerator then what what does that involve the it's called skew is run like there's a lot of cpg companies in Austin so it's run by like very tough people who have really built Big brands people who really know what they're doing accelerator becomes like yeah we're going to run you through the program we're gonna help you find the mentors that we need we're gonna help you find the capital that you're looking for but in a rigorous control way it's for of work very rigorous work like yeah it's not just oh we're going to tell you how amazing you are and we're going to make introductions to people who can fund this company is how do you build a plan how do you really account for all the variables which still allows you to make mistake but it's a very different mistake if you thought that the margin is going to be 1% higher versus oh I didn't account for my distributor margin for instance which is something that I have heard happen how much does it cost to go to the accelerator they get a small Equity Grant it doesn't have a cost per se and monetarily I am not a cynical person but after 45 years I'm not no I'm absolutely positive I'm not I am skeptical after 45 years of being sold to and giving money to all kinds of people from PR advertising to management consulting and I'm just a little concerned that you give them 50 grand and I'm afraid you could go there with anything and they're going to take the 50 Grand and I don't know that they're going to necessarily say I think your business plan is all over the place I don't know that you're ready to come to that I think they're going to take the 50 Grand so I I don't know that this is the panacy of you go there and they exhaust straight and set you on the right course oh no of course I just the franchising same thing you can go get money to Fran oh yeah oh we're gonna get you all over the country we already heard that one and you're you're kind of all over the place you just mentioned Walmart that is so opposite of everything you you're from what I understand that is so opposite of your entire brand to going to Walmart it's all about price that's all they're about I'm sorry I'm not going into Walmart you mentioned Walmart yeah I mean I know w i mean Walmart is a significant part of the industry it would be a mistake not to consider it I'm not going to Walmart because right now I don't see that that is the path but I'm not going to apply myself to an opportunity that can be really big I don't like Walmart have serious reservations of a Walmart but I'm not going to dismiss it just because I don't like it so when you said you want to be out in five years what is that how big a company would you have to have in order to get enough money out of it that you could afford to do that that's a complicated question I don't know I cannot tell you that I would put the figure in it that's going to evolve like I can say oh I want to if I can say right now I want to exit when I can exit for a billion dollars that would be kind of silly yeah I don't know in five years we're going to have to make a call and hopefully it's going to be wow we really this is life changing we're going to get a100 million out of it I'm very aware that it may not be the case maybe it will be just like okay I'm gonna sell it I'm gonna get a little bit chunk of money and then I'm going to have to figure out what the next thing is so that uncertainty is kind of like part of the game and part of the excitement obviously there are different paths different ways to do things Jay your instinct things are are very different you you know always wanted to build your company without taking in outside Capital that would give you someone that you had to uh no for sure but let let me finish let me finish here's what I'd like to hear from you Jay could you paint the picture for us what what's the alternative path that you could imagine and where would it get Hans and Louise uh if they followed it given where he's at and where he wants to go I certainly understand he is taking a different path than I took where in a very different place but I can appreciate what he's saying and what he wants to pull off as someone who's been in business a long time though I would say I'd want to understand the math of for instance if the company's profitable how fast could you grow without having to take in more investor money because you're not in the retail business where you're opening stores all around the country or something I'm not sure that I understand why you couldn't grow at 30% a year 40% a year even which is tremendous growth in not have to have it suck up a lot of money because there's not real estate there's not inventory I so I want to get the metrics down for that like what is the need for this capital and I also want to know you know what's the most you want to give up and then lastly you said something a little while ago about you're not gonna get rid of stress stress is a big bandwidth and I would put that gauge on your dashboard because there's ways of minimizing stress and there's ways of putting yourself jumping out the window stress and like in my case I never wanted to have to answer to anybody so that was easy for me I just didn't and I I got where I wanted to get without it my big phrase now it's not balance it's alignment if you don't want to have the maximum amount of stress that does change the way one thinks and some decisions made and maybe you're still figuring that out I would just say it's the three things it's the social good it's the profit and lastly it's the amount of stress you want to put on yourself and i' make sure you put that gauge on your dashboard because otherwise you could wake up on a very bad place like lots of people do I definitely get that and I think that in in this industry particularly this is the thing the the brand the little brand that grows and tribes by growing little by little doesn't really exist anymore in this space because at the end of the day I'm competing with Oreo I'm competing with the big players and I'm competing with very well funded Brands so it is not realistic no no that makes sense that is the competitive environment the goal here and the game that I'm playing let me stop you there for a second though Hans because you have done that initially I mean you grew a $5 million in Revenue with remarkable speed could you not maintain that trajectory without taking um investment dollars the thing is that that is like the what I really don't like the term but what they call a lifestyle business oh I was waiting for that yeah I I hate that term I really hate it I think it's super sick but and he he's sick and that was clearly invented by ABC because it's very dismissive but the way that we am and again this is about what you want and what I want out of what I want of is I want to see my company like really try like be a brand and build a brand that is what I want the opportunity is for me to do it by myself for myself for my own brand but I'm in a competitive environment when there's super well funded brands are there they are going to Target they are going to Costco and they are eating up the space and that is the reality and you see about this companies like um Cliff bar was an example they just exited for like two a half billion dollars sniders which was I think a$6 billion acquisition wait wait let's stop wait wait how long Cliff bar been around exactly a long time same with sniders sniders is a 40 a 40 year old company with a gigantic footprint that model doesn't really exist anymore because those are companies that build their own facilities that started slow where there was an opportunity there was not an e-commerce component so the velocity of the thing was a lot smaller now the expectation for a brand to succeed is that it's going to have a national footprint in three years and if it doesn't it is not successful and it's very hard for say Target to support it and for Walmart for Costco for whoever it is it's very hard to support it so it is in many in many regards it's about the competitive environment and I really have a very clear understanding that what I do want is what I want to exit this I don't want to keep doing it forever because what now is the thrill of seeing it grow is going to grow fast and as I grow older it's going to get harder and I'm not going to be in this in I don't I'm going to have the energy for that I don't want to keep this pace forever I'm willing to do it now but at some point I won't and the reality is that this consolidation that we see in food where everything is like seven or eight companies that own everything that is is the reality of the business and you can dislike it as much as you want but it is what it is so for in order for to have a successful cpg brand I need to have an except because otherwise I'm going to need to sync $50 million in a facility that can build this for me and and I again it's not financially viable so it's a very different game that those 25 year old companies don't exist anymore like they are not being built at all you know what I I buy what you're saying that that all makes sense actually I so I so so the only thing I would say is what you said makes sense the other alternative which doesn't maybe isn't appealing to you is if you grew it at 20 30% a year you'd get up in five five years whatever maybe you'd get up to 20 million 30 million in sales 40 million and you could sell it for decent money and have enough to retire and but maybe that's not appealing to you doesn't sound like it is again it is very hard to do in this environment which I understand what where you're coming from because it you can't wait you can't do it online it seems like you're already doing it no actually it's become very he become very hard like the reason we're going to the reason we're going into retail is because e-commerce has become a very treacherous like ever since the Privacy Wars between Facebook and apple advertising on e-commerce has been more and more difficult there are so many options so many competitors so many people claiming the same space because frankly I get why a lot of people say oh this is going to be easy we're going to make a killing in e-commerce is very hard is super hard so what I need to do in order to give myself what I want out of this so I need to build a company that is going to be palatable to the mlay or the Kells or the slaves of the world that is the the new reality if you will it would be a way different thing if I if I was saying okay I'm GNA set up a bakery and I'm gon to sell cookies and I'm gonna make a living out of it I'm GNA be very happy doing that but that's not what I'm do okay wait I need to stop you there because now that's the second wipe the first one was the lifestyle make a living okay doing $30 million a year is not a lifestyle business and it's not making a living it's making a fortune and being extremely successful so I just want to say stop with the oh you're either big or oh you're just a little that's just and you know it because you said you don't like the word lifestyle business so don't brainwash yourself or try to tell me or anyone else oh it's either go big or just sit home with your apron on and make some cookies because that's simply not the case you could build it to a 30 or $40 million business make a forun and sell it for a lot of money that is an option which maybe you don't want to do but that is a that is an option oh of course no definitely a 34 million do business that is a very respectable exit and that is the thing that requires an insane amount of capital like you can be you can say like it is a very low margin business it requires not enough Capital there's not much left over like yeah a $3 million $30 million insuring Revenue I assume you mean yeah a $30 million company in consumer goods is probably making is clearing half a million dollars wait even if you and maybe and and you might have the answer to this you're suggesting you can't do it the way you've been doing it just online you can't get to that size online too competitive I guess you could but you are competing against very well funded companies so it is it is a competitive environment I mean that's why you're seeing a ton of companies fault right now particularly e-commerce companies I was not immune to it by any means you can purchase Revenue oh you have Psy money you raise $40 million it sucks because these companies who raise $40 million are running me out of business because they're running ads at a pace where they don't care if they lose money no you're absolutely right I've seen it in even in my industry you're absolutely right there's companies out there throwing money around and it's just a matter of time before someone wakes up and goes what wait why are we losing money on this this business pull a plug on it for sure of course but in the meantime before that happens and it's happening it's already happening that that world like that free money uh mentality is going away yeah but in the meantime it screws over everyone else so I definitely see what you're saying and I really wish that the world was different but this is what I'm dealing with it is a very tough competitive environment and I can have like this thing where I we're going to run small definitely a $40 million business is a very very successful business I have I mean I'm not trying to say like it's billion dollar a bust but that middle ground is very hard to find now all right my thanks to Jay gos and Han shy and of course to our sponsor the great game of business which helps businesses Implement open book management and employee ownership you can learn more at Great game.com Hans and Jay thank you very much great [Music] conversation Wait Wait Don't Leave You yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's L ren21 hats.com do it now before you forget and don't be afraid to tell Jay what you really think he can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcasts follow us on Twitter subscribe to the Morning Report report at 21h hats.com this episode was produced by Jess thubron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]