The Product Is Great. Is It a Business?

[Music] Hello everyone. Welcome to the 21 Hats podcast. I'm your host Lauren Feldman. This week we bring you another 21 Hats brainstorm. Alan Daniel, who started a small batch hummus business inspired by a memorable experience in Israel, is trying to figure out his best path to long-term viability. So far, he's been selling at farmers markets and direct to consumers, making all the hummus and all the deliveries himself. Since February, his sales have been growing between 5 and 10% a week, but his growth is constrained by his refusal to use preservatives, which adds flavor, but limits the product's shelf life. So, how should he proceed? Should he sell to specialty markets and restaurants? Should he try to sell to Whole Foods? Should he open his own hummus restaurant or humia? Should he try to introduce his hummus to the uninitiated? Or should he focus on connoisseurs? To help Alain think through his options, we convened a panel of 21 Hats brainstormers and recorded this podcast. It's brought to you by Newbridge Studios, which helps companies, creators, and causes connect their story to the bottom line. And by the way, if you have a challenge you'd like to put before a panel of business owners in our next brainstorm, shoot me an email, lauren@21s.com. Joining me this week on the podcast are our brainstorm facilitator Chris Hutchinson and his colleague Katie Huey of Trebuche Group, plus Mars Chapman of Casey's New Orleans Snowballs, Amy Collins of the OA Group, Rachel Ezekiel Fishbine of Making Headlines Public Relations, Jay Goultz of the Golds Group, Megan Perona of AR Manufacturing, Lisa Peterson of Wealth Clinic, Kathy Steel of Red Caffeine, Eric Stites of Franchise business review and Tabitha Mason of Zingermanman's. The episode is titled, "The product is great. Is it a business?" Welcome to another 21 Hats brainstorm led by Chris Hutchinson and his colleague Katie Huey. As most of you know, our goal here is to have some fun, to maybe learn a little, but most importantly to try to help an entrepreneur who is confronting a challenge. And in this case, that entrepreneur is Elon Daniel, who is building a small business, but is trying to decide what kind of business he wants it to be when it grows up. Uh, more about that in a minute. Uh, but first, two things. One, this brainstorm is brought to you by Newbridge Studios, which helps companies, creators, and causes connect their story to the bottom line. And two, uh, Chris is going to talk to us a little bit about how this works. You want to explain it, Chris? >> Sure. Thanks, Lauren. Um, I I just want to know, you know, as business owners, how many of you want somebody to come up, poke a finger in your chest, and tell you exactly what you need to do with your business? Just raise your hand. Yeah. Exactly. What we are here to do is to do some mutual learning. We're not here to teach Elon exactly what we know. We are going to have two parts to this. The first part's going to be we're going to ask questions to explore the thinking. Great questions. Start with what, how much or how, how much are you looking for getting out of this business? What are you thinking about in terms of growth? How are you considering the challenges you're facing? You know, we're asking these bigger questions, open-ended questions, so we're all learning together. After we get through that phase, then we'll focus down on what are the specific challenges that Elon wants some support with and then we're going to deputize you all to do some solution thinking, not here's the answer, going to be pieces, parts that he can put together to try to help support his thinking. Just want to let you know I I'll try to be pretty gentle, but you're not here to lay wisdom on him. You're here to learn with him and then share things that are pertinent when we get to the second phase. Okay. So Lauren's going to start interviewing Elon and give us some uh basically the food for thought here and your job is to think of what kind of question could expand our understanding together. All right, go ahead Lauren. >> Food for thought. I like that Chris. I saw what you did there. >> Little hummus. Food for thought. >> First of all, Alain, I want you to know that two of the people here uh Mars Chapman and Megan Perona went through this process themselves and they came back. So it's possible to survive this. That's a a good thing for you to know. >> Let's start by kind of setting the scene a little bit. You decided to start a business making and selling hummus. Why? >> Well, it all started on my honeymoon in Israel. Now, I've I've always eaten hummus and, you know, enjoyed it at home in the United States, but we went to Israel in a city called Ako. There's a a humumus. So, a place that just sells humus or hummus. And I remember we missed it a couple times cuz it's like this little hole in the wall. It's like one doorway, no windows. It's in the middle of a very busy old market with lots of smells and sounds. And there was a huge line. Blind moved quite quickly. Two things on the menu. Hummus or humumus and hummus with fool, which is um fava beans on top of humus. So it's really just humus. Uh, and they still ask you what you want. And I was like, uh, obviously hummus. Uh, so we sat down and they they immediately bring some pickles and some pa. And the hummus is basically out right away cuz it's already done essentially. It's warm, it's soft, it's smooth. And I was, you know, the whole experience was kind of a little bit jarring. But I remember taking my first bite and having this moment of what is this? Where am I? What is happening? what have I been eating my entire life? Uh it was it was basically world changing. Kind of turned me upside down. So I uh came home and started eating my normal store-bought uh hummus again and just could never it's it's kind of that saying once you eat cake you can never go back to just eating bread every day. And so as a result I started experimenting and trying to make my own humus to emulate humus was the place in Ako. I don't think I mentioned that. Uh, and I I still to this day have not gotten anywhere close to humid cuz his humus is uh legendary, but uh I've I've come as close as I can so far, but uh I I I started making it for myself and uh I would bring it to parties and I'd bring it to friends house or, you know, Super Bowl things or whatever and people would eat it and just be like, "This is amazing. This is so good. How do you do it?" D. And before I knew it, I was selling it out of the house in Indiana. And uh if you know anything about Indiana, uh they Indianapolis specifically, they they struggle for ethnic foods. Uh so my my humus was the closest to authentic Middle Eastern ethnic food that a lot of people had had. And so I started selling it out of the house and was very popular, selling out every week. But uh we we ended up moving to Princeton, New Jersey, where I actually went to high school. and I decided to kind of kick it up a notch. But um I I got my you know serve safe certification. I started renting out a commissary, started selling at farmers markets and we started actually the farmers market circuit in February. And uh this business has been growing pretty steadily ever since. And I'd say we're growing almost 5 to 10% per week, which is kind of incredible having only started 2025 and February. Uh, but I'm trying to figure out at this point if uh I need to keep growing and if I do, is there is there a is there an exponential growth pattern happening that I need to find a different system to get me there? You know, I have a lot of questions and uh I I' I've never gotten to this point, especially with food businesses. I have had other businesses, but this is unique to to my experience. So, and I want to say also thank you Lauren for having me and thank you everyone for being here to assist me as I uh look to grow the business and uh advance this this business. >> That's great. Thank you. Alan, give us a sense of how far along you are. I mean, do do you have employees? Are you doing this yourself? Where does that stand? So the vast majority of the cooking is me. I have expanded the menu beyond humus. Uh so one of the first things I added was pa because without pa you you know if you don't have a right vehicle to deliver the humus the humus itself kind of loses a little something. And I've played with that a number of ways. And then I've also added Soo. So, as things have grown, I've had to kind of grow a little bit here and there, but I have three employees now, all part, super part-time, you know, maybe 5 to 10 hours a week. And one person is helping me make PA because PA can be very uh labor intensive with the rolling and hand forming. And then I have two people helping me at markets, especially on days when we're at two separate markets. So, we went from one market every other week to three markets every week. So, I'm, you know, it's again, it's like really quickly evolving. >> Do you sell in other ways? Uh, you have a website, Reich, individuals can order it as well, correct? >> Yes. So, I have a a bit of a radius for people living within essentially 5 to 10 miles. Uh, I offer a delivery service. So I, you know, because I finish making everything Thursday, Friday morning. So Friday afternoon before markets on Saturday, I'll deliver to to a few people. So I have these sort of regular people and I have people who subscribe. So every week kind of like, you know, every week you go to the grocery store, you get the same thing. Uh, so every week there are certain people I give the exact same order to on Friday afternoon. Do you feel as though there's anything holding you back at the moment? >> Yeah, I think a retail location would be helpful. I do get that question a lot from people at the market is, "Do you have a retail location that we can come to during the week?" Uh, I've had other people say, "Do you deliver this far?" I don't just I can't I can't justify driving, you know, 30 minutes one way to deliver a, you know, $20 order cuz it just doesn't make sense. Uh, and so I'll meet people in the middle. But if I had a retail location, obviously there would be a lot easier place to send people. Just come on in, grab some stuff, and run. So I think that's a bit of a a hindrance. Uh, another option there and this is where the question starts is getting the the humumus into other locations. So into say grocery stores or specialty markets etc. or finding other restaurants that might want to hold it and then sell it off their shelves. And you know, the question is, should I be investing and leaning into more of the industrial where I'm focusing on the making and having other people sell it, or should I have a location where I'm selling it and focus really on on the sales? Cuz those are two extremely different processes and different types of investments. So, you know, industrial would be more in the equipment and then the retail would probably be more in the space itself. So, it's it's kind of bouncing between the two and I don't know if there's a happy medium, but >> do you have a vision in your mind of where you'd like this business to be in say 5 years? >> I'd say I mean prediction and vision are tough. All right. I know what I'd like to do. It doesn't mean I I'll go there. I'd say I'd like to see certainly more stability. Uh so in the sense of having my own location where I can make it uh that I have full control over the kitchen and then enough steady growth that I can sort of predict where I'm headed next as opposed to trying to guess from kind of erratic ups and downs which I know that's just the way food goes but yeah I don't I I I think if I were to if I were to you know dream not just big but just dream a a dream is I lean more into retail and I've asked all my employees, my wife, my child like where do you see this business going and everyone has said retail not industrial because of who I am not necessarily because of what the business is which is I think an interesting way to to frame that that thought uh because I really enjoy the interaction with the people which they they all see me at the farmers market and you know one of my favorite things is giving people something new that they've never tried and them sort of their face lighting up and be like what what is this right which is the name of the business maza in Hebrew means what is this? Uh, and a lot of a lot of times before they even try something, they'll come up and say, "What is this?" Cuz it doesn't even look familiar. Yeah, exactly. Like, what? Um, so yeah. So, I I think retail kind of plays to my strengths, but that doesn't mean that it's going to play to the strength of the business. And I I want to make sure I'm honoring what makes the most sense for all of the different people I'm going to serve best as much as what I can offer the business and the customers. So, as some people here know, I met you at a July 4th barbecue this year, where I tasted your hummus, which was terrific, and I asked you about it, and you told me that one of the reasons it's as good as it is, is because it doesn't contain preservatives like most store-bought hummus does. How do you think about that in terms of you just talked about getting into more retail locations? How big of a hindrance do you imagine that to be if you continue to make it without preservatives? >> Yeah, I think that that I think that's an important part of what makes it as good as it is. Not just my humus, but what also detracts from the storebought hummus is the preservatives. The citric acid feels like an overpowering flavor in the vast majority of them. and you almost can't even taste the chickpeas or the tina or tahini. So, um yeah, I think I think that's important. And part of what uh my sort of vision of being an industrialoriented business that doesn't do preservatives is having these sort of ghost kitchens in uh locations closer to retail locations. So, if I went in that direction, that's how it would have to go in my mind because you'd have to prepare it close to where you're selling it, not necessarily at the exact location you're you're selling it. >> All right, let's open up to questions. Who has a question? And please start by stating your name and what you do. >> Go ahead, Rachel. Introduce yourself. >> Ezekiel Fishbine. I do public relations. Alan, your story resonated with me as I'm lover of Israel, lover of hummus and actually have a friend in the hummus business. I'm wondering what your vision is for your audience. If you are envisioning this as more of a niche product for a specialty audience, if you're hoping that this is going to become a larger thing that introduces everyone to humus, um because in my head as a PR person, I have all these ideas about the narrative of your story, but it really depends on who you're trying to reach and how you're thinking about your audience. >> Yeah, that that's a great question. And the audience honestly I kind of think is everybody like you said just trying to get people to taste what as close to real humus should taste like. Again not say but I'm close. Um and also it's not it's not the preservative based stuff that you get at the grocery store but I think for I'll give you an example of what I'm experiencing now in Princeton. One of my main audiences in Princeton are Israelis because Princeton University is a major attractor of Israeli uh high-tech talent, etc. that that end up becoming academics here. And so a lot of Israelis end up moving here, don't stay for very long, some stay for very long. But there's there's actually um a WhatsApp group specifically is for Israelis in Princeton. So, it's super super local, super specific. And people come to the farmers markets because they saw someone post that I was at a farmers market in that WhatsApp group. And one of the things I've also seen is I've seen uh Israelis get very passionate about my kumus because I think it gives them an ability to share their culture, our culture with uh non-Israelis that also then get very excited about what is this thing I've been missing my whole life that you guys have been doing for you know however however long. It's sort of like almost the Apple situation with the early adopters. They're not early adopters. They're they're already ad adopted trying to then evangel evangelize uh hummus to to other people. So they've sort of been a great a great asset for me in Princeton. But then of course there's the local people who I interact with on a regular basis that are just interested in you know the thing people have been talking about. uh like like Lauren. Uh and then of course there's tourists that come through farmers markets that are just kind of exploring the farmers market and they kind of find this new little experience on one of the stands and you know they'll sit and talk with me for uh a long, you know, a good chunk of time just learning about different types of food that they'd never heard of or whatever. Uh, and then of course in Princeton, I think, uh, there's another audience that you don't necessarily get everywhere, and that's university students. I kind of almost see them as their own version of long-term tourists, right? They come, they stay for 4 years, they kind of experience uh, a little bit of this town, but then focus on their focus area, but then a lot of times they're they're gone. So, I think there's there's four different audiences that I currently interact with. Uh, and right now, I think the one that gives me the most sort of I guess the the biggest megaphone, if I were to put it that way, is are the Israelis. >> Okay, Jay has a question. Then Eric, then Kathy. So, Jay, go ahead. What's your question? >> I've got a couple, three. One, what kind of margins do you have? Could you sell to a store and leave enough room for markup that should there be anything left? Have you done analysis on that? >> Yeah. Uh I think there is I think I'm right now though, you know, I'm my margin right now. So cost of goods sold is 20%. Um which is not bad. So I could probably sell it at 50% and then still have 30 left over. >> That includes labor when you say cost goods sold, right? >> No, that's what I >> Okay. Just that's called cost of materials. I'm in the frame business. I fight with people constantly with this. They don't count their time. Cost of goods sold in manufacturing includes labor. So with the labor, how much is your cost of goods sold if you had to pay people? >> Well, if you count me as zero, then it's but but that's a problem. >> Yeah, that's the question. That's a great set of questions. Jay, >> let me just ask. Did you look into getting kosher uh certification? >> Yes. Uh oh, I don't have a I can't do it yet because right now I'm in a commissary. So once I get my own location, then I could look at that. I've already talked to my rabbi in town. Uh once she found out I was doing it, she was already like, "Uh, have you ever thought about going kosher?" Well, yeah, but I can't yet. You're not going to heure this commissary that's working with pork and whatnot. >> All right, >> great. Thanks, Jay. Eric, why don't you introduce yourself and ask a question? >> Yeah, Eric Sites uh with Franchise Business Review. Um Elon, very interesting, uh business. you touched a little bit on it, but I want to kind of go back to um you know what you're looking for as far as you know you talked about the sales side of the business, the marketing side of the business being very different from the you know cooking and production side of the business. I guess I want to understand where your heart is a little bit more in that those two areas and then also generally from a financial perspective like you know are you currently meeting you know your kind of lifestyle goals are you looking to expand that dramatically like what's that kind of personal drive I guess from the financial side of the specifics of the business >> you know those are great questions um you know And I haven't actually spent that much time I I'm spend so much time of my life being introspective about what I want from my life and all of that. This is one of those moments where I just said I don't care what I want. Just go do it. Go do something. Uh and see what happens. And I never expected this to be as successful as it's been quite honestly. Uh but I started doing it because I enjoy it and I love it. And it just happened. Maybe that's part of the reason and part of the recipe for the success around it. But yeah, I actually haven't h I haven't thought much about what I really want from this other than the fact that I just wanted to do it, so I did it. And the thing I like most about it, I I honestly I don't think I could say one thing I love so much about it. Uh I love cooking. I've always loved cooking. That's part of the reason why I was told myself, "Hey, I'm going to make a life doing this." Uh but I also love socializing which is they're two very different things. Cooking is not very social. Uh but the selling is extremely social. So I get to do sort of you know scratch two itches with one business. And then as far as your question around lifestyle goals, I am extremely lucky to have a wife in academia uh who works at NYU and is able to cover most of our bills. So I can do things like this. Yeah. So I'm not I'm not as concerned about uh exploding our our you know our net worth or anything of that that nature. But um at the moment I'm really just I'm enjoying it and I want to continue enjoy it and I want it to grow to a point where it's not necessarily just a hobby that makes a bit of money that maybe it is uh a contributor to our our household income but also something that can contribute to the community something that can contribute to employees uh lifestyles. You know it doesn't necessarily have to be just about me because I get so much joy from giving. Uh, I I I worked in the nonprofit sector before, if that tells you anything. I I really did enjoy giving more than I I enjoyed getting. And I hope to get it to that point where I can also give as much as I'm getting. >> All right. Uh, we have Kathy, and then there's Amy, Tabitha, and Mars. So, Kathy, introduce yourself and your question. >> Yes. So, I'm Kathy Steel. Uh, I am the CEO of Red Caffeine, and I love Eric's questions about your your vision. And I I think that's critically important to like setting the direction. Um, but my question is really about your product itself. Talk to us. I mean, you talked about it being a fresh product without preservatives. You talked about it being something unexpected from what people traditionally expect from hummus. But tell us a little bit more about what really truly differentiates it from other products out there. How could you in a marketplace where it's going to be very competitive, you know, stand out? >> You know, the the proof is in the hummus. But, um, unfortunately, I can't send you all samples. Uh, but when people do come up and try it, cuz I I I'm very sample oriented, you know, cuz it's it is it it definitely has a unique flavor to hummus. People who are in the restaurant business will taste and be like, "This is very unique in flavor, and it's delicate. It's very um subtle in its uniqueness. I guess it's my spice mix, but also Israeli hummus is a little different than the typical because it's more uh tahini based as opposed to more chickpea based. So, it's a little richer. Um so, Israeli food in general tends to catch people off guard, I think, in a lot of ways because it is a little unique. Uh not not completely cuz you know it it Israel is a melting pot of many Jewish cultures around the world and we brought all of these different culinary traditions together. And so for example uh ama I don't know if you've ever heard of amba. Uh it's a it's kind of a a fermented mango pickle that uh we use on something called sabik a lot or and other stuff but it's very similar to uh a chutney right so but it's from Iraq it's the Iraqi Jews that were doing business in India that brought it to Iraq made it popular in Iraq but then when we moved to Israel immediately started building these ABA factories and you know It's it's one of the major ingredients in a lot of Israeli cooking, but it's Indian, Iraqi, Israeli. It's sort of this weird amalgamation of different cultures all mashed together. So, I think the Israeli thing is starting to catch some popularity, but it's still a little bit uh unique in the in the United States. So, for example, you know, the in this this region, we have Zahab and we have um Laser Wolf. And I don't know if you've heard of Zaha the was it Michelin it's a it's an Israeli restaurant in Philly is he's a James Beard I think award winner maybe Michelin star I can't I can't remember all his >> it's a restaurant that's it's impossible to get into in Philadelphia. >> Okay. Okay. So you are definitely a foodie choice regardless of you know the origin um of the product. talk a little bit about like shelf life and some of the barriers to you know and limitations to the product. >> Yeah, shelf life is is probably going to be a challenge. I I would see it and these are great questions to sort of help me understand the viability of an industrial product. I think the shelf life is probably about a week. So it it would probably sit in say a deli aisle as opposed to the hummus aisle. So that that is a bit of a challenge, right? the freshness and uh the lack of preservatives uh on a grocery shelf could be a challenge for maybe one that it's not not turning as quickly, so it would be they'd have to throw it out a lot more often. Uh so that's that's a good point. >> And and would that like also include some of the other products? I I I noticed that you had a lot of other products on the website, but you mentioned making homemade pitha, which I also imagine has a bit of a a shelf life as well. So, the pa actually is freezable because what I do uh because I have to make it ready for uh farmers markets and in my opinion the shelf life of pa is actually 1 hour >> cuz it starts to go a little chewy after that. So, I par bake it, freeze it, and then when I go to the markets, I actually take a little pizza oven and finish it for people or tell them, "Take it home, freeze it, when you're ready, pop it in the oven for 5 minutes um and finish it off." So, and has actually worked quite well. Let me see if I can get these other three questions in before we break out uh to talk about or we get to that place where you're going to pick what you most want us to give advice on or ideas or caution. So, we've got Amy Tabitha and Mars. Amy, introduce yourself. >> I'm Amy Collins. I'm the founder and CEO of the OEA Group. Um we provide underwriting services to community development financial institutions across the US. So, I do not know anything about the food industry. I know a lot about small business finance. And I'm curious if you are interested or interested in or would consider opening a restaurant. Um, oh, I'll also add I lived in Jerusalem for four years um between 2017 and 2021. So, I have eaten a lot of hummus. Uh, and I think I would be your customer if I lived close to you. So, I can kind of put myself in the shoes of your customer. I feel like and combining that with my experience with small business finance and hearing what you're saying about this dichotomy or what you view as are we doing retail or are we uh what did you call it doing industrial production? Like retail to me feels like all the downsides of the industrial side without the upside that you would get from a restaurant. A restaurant sounds like it would connect your passions of being with people, serving people, kind of helping people to experience the food and fall in love with it. And I'm picturing if you had a restaurant, you could also sell um you know your your product in containers to go and that could be the retail. But I don't know, even being a lover of hummus, that I would drive to a retail location just to pick up that one grocery item. And so that points me to I feel like you either need to go industrial and try to get into Whole Foods and all these other, you know, bigger stores or uh open a restaurant. Are you interested in a restaurant? >> Well, I'll clarify. When I say retail, I mean restaurant style where I'm interacting directly with customers as opposed to me having, you know, getting a middle person as in a grocery store or something else. Um, so imagine when I think retail, I think hummus, >> okay, >> really small, just has humus, but stuff that compliments humus as well. >> But you can eat it there at the counter if you want to. >> Yeah. >> Got it. Okay. Okay. >> Good, good clarification. Thank you. Tabitha, introduce yourself and your question. >> Hi, I'm Tabitha Mason. I own a Zingermanman's business in Ann Arbor, Michigan. Uh, and my mouth is watering. Um, uh, feel like I would have better questions if I really understood your vision and where you want to go because that is something that we really stress, uh, within our organization. But taking that to the side, I'd love to hear about how you set your current uh pricing structure and what you see right now are the bottlenecks uh to to either further growth or helping you make your decision. >> Yes, this is great questions. So, my my pricing structure is on the low side. I I want to be in a place where everyone can access it. Uh but I'm also able to to have some margin to to make sure that I can grow as a business because you want to be able to take some of that from the top and put it back into the business. Uh I think if there was uh a retail location, I would I would have to increase my price a little bit. So, for example, 5 oz of hummus is $6 on its own, and it's, you know, it's pretty small. I think it's I think it's about a single serving, so for a single for like one person, uh, at one sitting, but then I have a hummus with a topping, right? So, uh, I have the toppings themselves you can eat on their own, except for maybe. I don't know if anyone knows what is like a really spicy green sauce. And I do a two for 10, right? Right. So, it's a it's a nice little upsell where it's like, "Oh, you know, you save two bucks if you get another thing." And uh and it it comp it it usually compliments the hummus itself. And in Israel, a lot of times, very often goes with hummus. And I honestly that's the that's the trifecta that I like, paos, and you kind of put the in the middle and swipe. But, um but I have other toppings as well. So, if someone's not into spicy stuff, I've got a sweeter thing or I've got a more uh umami thing or so, but you can definitely have those on their own. They're almost some of them are their own dips, some of them are almost salads on their own. Uh so, that's kind of my structure right now. It's a good way for me to to get complimentary things together at something that makes the customer feel like they're getting uh a good price as well as, you know, a good value. And uh I I for simplicity sake I just do a dollar per piece of PETA. And then sorry what was the second part of your question? That was the pricing structure. >> I'd love to hear about what you think the current bottlenecks are either to helping you make a decision or to growth. >> Yeah. So uh one of the big bottlenecks is binding space. Uh, I've actually started looking and I've been talking to uh listing brokers and whatnot of different spaces and uh New Jersey is a not an easy place to find real estate. Uh, I don't know if anyone's aware with the real estate market around here, the housing market alone, but most certainly the commercial space. And uh, that that's definitely been a bottleneck. I think another bottleneck would be the lack of having a space because it's kind of hard to to hire someone to to sort of help uh exponentially grow the amount that I'm actually able to make cuz the amount you can sell is dependent on how much you make, especially if you sell out every week. So I think space is a big is a big component and that's really the next that's the next step in my journey and I think that's why I have that question in the back of my head all the time about do I want to go restaurant retail or do I want to go industrial because it's about time to start looking and do I need to get to a certain level of sales before I even look for a space or am I at a point now that I can justify How do I even know? I think the space is a big big component. >> So, we have two more questions and then we're going to shift to the uh well gets to pick sort of what his most important request of us would be and then we'll all provide some advice and ideas. So, it's going to be Mars and then Lauren. So, Mars, what go ahead and introduce yourself. >> Hi, thanks for sharing your story. My name is Mars Chapman. I own Casey's New Orleans Snowballs in Austin, Texas. I too am very passionate about a food product that is rather specific and uh not treated fairly by the laws of thermodynamics or physics. I have a very short question and then one that's just a little bit more. Um one, are you paying yourself? Uh and then two, have you ever worked in consumer package goods or uh restaurants before? >> Uh I am paying myself a very modest amount. Uh the best paid employee on my staff is my 10-year-old daughter. So I'm I'm paying myself in a way uh through her. She she's she's the best return on investment ever on this whole thing cuz she's learning all kinds of skills she wouldn't otherwise get. And yes, I have definitely worked in the food industry before. Uh I worked as a barista for a year. I worked in a restaurant as a server for two years. Worked as a cashier in a restaurant. I worked as a bartender in London, which was a a trip of itself uh for a year, you know, because an American and a British bar was during a time when they were not real happy with the uh American political situation was was very fun cuz especially as they got uh later in the evening as they drank more, they got a little more free on their uh their views. So, I got yelled at a few times, but uh yes, I've I've definitely I actually it's kind of interesting. I've spent most of my non sort of professional career working in the food industry and enjoying it, but then working towards a career that I didn't end up enjoying. And I find myself back here for I think good reason. And Amy, uh, by the way, I worked in community development for the last 18 years. So, >> yeah, >> I know community development well. So when you say CDFI, I was like, "Yep, I can speak your language for sure." >> Awesome. >> So, we're gonna have Lauren wrap it up before we shift gears. >> One last quick question, Elon. Have you thought much about how much risk you're willing to take to try to build this business? Would you be comfortable, for example, taking on an investor or a partner or taking out a a loan, using your home as collateral, all those fun things? Is is that something you've thought about? >> How do I measure the different levels of risk? How would you measure the different levels of risk that I'd be willing to take? >> I'm not sure what you mean by >> you're willing to sign a lease. Are you willing to sign a lease for three grand a month? >> Yes. That that I'm willing to Well, as long as it's not 10 years. That was one that I've had recently where I was like 10 years. That's a long >> That's a long time. >> Yeah. Uh and then with a 5% uh escalation clause was >> That's ridiculous. >> It's ridiculous. And it's not a very high traffic area either. Uh so no, those you calculated risk for sure. Uh investor I I want to see how far I can go on my own before I need to take on an investor. You know, I guess it would depend on the situation, right? If the investor is bringing something to the table that can grow the business in a way that I can't, then I could see that being an an important value to the business itself. Uh it depends on sort of how we might interact as well. And then putting a mortgage on my house maybe. I don't know. >> Can we get your wife in the picture here? >> Yeah, I I can get her. Okay. So, so we're at the turning point in the conversation, but I'm wondering if you know you can also just pull back a little and say what would you really like for this group to give you and here's what they're going to do is they're going to give you a success tip, a caution or a next step. It's not here's your business plan for the next five years. It's just one piece like oh yeah, watch out for this or here's something that can be really helpful or here's the next step that you might want to take. And so what can we do for you? what's the question or the consideration you want us to give you advice about? So I think ultimately it's how do I decide which way to grow and what pieces of information are my clues to finding out what is the right decision around the markets that I have. Uh when I say markets I mean the audiences uh for for Rachel's way of framing it. uh as well as you know the customer base, the the product types as well as the the type of business that it might better be suited for. Does that all make sense? Let me see. So, I might have captured it. I tried to do it in the text in the chat field. I said, "How do I decide which way to go and what are the clues and pieces of information I need to know?" Is that the basic thing? >> Yeah, I think that's good. >> Okay. Um, so Katie, can you move us over to the second step of the next? There we go. Perfect. So, this will be a little bit quiet. We're gonna have people type in your name and then whatever the thing is that would answer this question. How does Elon decide which way to go? What are the clues and pieces of information that he needs to know to make this good this decision? [Music] So at this point, everyone in the brainstorm attempts to respond to the question formulated by Alain and Chris by offering a success tip, a caution, or a next step. The participants type their thoughts into the software program that Chris uses, which allows everyone to see the suggestions and to like the ones they favor. The suggestions that get the most likes rise to the top of the list. When everyone is ready, Chris asks the authors of the most liked recommendations to explain their thinking to Alain. [Music] >> And so Jay, why don't you kick us off there with the one at the top >> and remind us who you are? >> Jay Golds. I own Artists Frame Service, Picture Framing, and a furniture store. 120 employees. If you ask me what my biggest mistake was, pricing, it's absolutely at the top of the list. I think one's going to have to really get a good understanding what is it truly going to cost to manufacture this when you're not using 10 year olds or yourself and selling at retail whoosh half the margin's gone. So the question becomes where's the best opportunity to you know either do the volume at a lower margin or maybe it's not worth chasing the volume and going for the full you know taking the whole markup or maybe there's a somewhere in between with uh doing more online stuff and I think the kosher thing is kosher sells a lot more product it's not just Jews that buy kosher uh a lot of people buy kosher vegetarians Muslims blah blah blah so that might be a big advantage Saw several people nodding their heads to that. So that's really good. Elon, any question or should we press on to the next one? >> Uh yeah. So what are some good ways to pricing strategy? What's the best way to determine, you know, your pricing strategy beyond your own cost? You know, uh h how can you know what the market will bear other than putting it out there? >> That is a huge mistake that I've watched lots of people go broke. They think the key is you got to go out there and charge as le least as you have to. And the secret to business is charging the most that you can. And the fact of the matter is when you're making a premium product. I hear words like, "Oh, I don't want to rip anyone off. Oh, I want to be fair. I want to be accessible." There's only one word as far as I'm concerned, and that is what is the appropriate price. And the appropriate price includes you making sure you can make money on it. And if the market can't bear that, you don't have a business. So, um, Zingermanman's is a lovely, great place. Love it. It's not inexpensive, right? Would you call it inexpensive? I don't think so. It's It's >> Peppa is shaking her head pretty vigorously. >> Yeah, I've got the same thing with framing. No matter what I charge for picture framing, people complain about it and and I see people go broke all the time and I can't tell you how many people have told me the year after they came to what class I had that it saved their business. You got to charge what you got to charge. That's the reality of business. And uh until you figure out what your true cost is to figure out how long does it take to make, what is your margin, and then and then you have to figure out what your overhead is that the margins got to cover, you need to come up with a quote unquote model income statement of, okay, if I want to make 100 grand a year, here's what I got to gross, here's what my material is going to cost, here's what labor's going to cost, and here's the overhead, and see if you can get that to work. >> But really, you're you're building your pricing strategy around your overhead. >> Absolutely. your cost. >> Absolutely. That's certainly not Well, other people are char these places that are you're competing against are mass gigantic factories, you know, cranking out hundreds of thousands of these products. You can't use that. You've got a premium product. It's and it's got a short shelf life. It's not going to be the same price. >> And what what are I mean maybe Tabitha has a good sense of what what are sort of margins around premium products? I Ann Arbor is maybe a little different than Princeton, but college town. So, >> we'll skip over to Tea. >> We don't apologize for our pricing. It is important to us that we have products that are approachable, but that there's a big range, right, within approachable. And so, we have a wedding venue that has very small and very large. You know, you can buy day old things and a half a sandwich all the way up to something very expensive. And so, for us, it's understanding why we charge what we charge and helping our customers uh understand that. And so our customers when someone says on a local um you know group, oh it's to don't go there, it's too expensive, they hop in and talk about our insurance and all the things that we do for the community uh because they they understand. So I I'm look at what market can bear and we aren't ashamed of profit because you can do good when you're profitable. >> And there are going to be people that say you're too expensive. >> Live with it. That's life. You can't think you're going to get everybody to say, "Oh, no, that's reasonable." Like, yeah, it's going to there's going to be some people that are they want to go get cheap crap. >> Knock yourself out. >> Yeah, >> I was just going to say Mars Chapman, Casey's New Orleans Snowballs. Something that might be helpful to think about is you're not competing with I forget the the some of the big national hummus companies out there. You're not competing with them. You sell a boutique, fantastic, hyper local, made within the last 48 hours, uh, freshly baked bread served with love and heart right there from your hands to the customer's hands. You're not competing with them. You're competing with like, I'm going to think of people who are doing like really bougie candy or flowers. You're competing with like a really special high-end experience. And so when you think of pricing, make sure also that you're comparing that component of it as well. Um, yes, it is hummus. Um, yes, you can get it from a national company for very cheap for an 8 oz deli container, but I don't think that what that is and what you're making are anywhere. They aren't playing the same sport. >> So, let's go to Amy real quick. >> I'm Amy Collins. My comment was to look for a popup opportunity, a place where you could open possibly a temporary restaurant for 30, 60, 90 days, which would allow you to do two things. First, see how it's received by the community. Maybe you get a lot more foot traffic, interest, and excitement than you think, or vice versa. And also kind of work out the kinks and see if you like it. I don't know what opportunities exist for that in Princeton. Um, but I would imagine especially being close to a college campus that that is a possibility which is connected to my other comment which was just to be extremely cautious about taking on overhead. Um, I'm an entrepreneur, but I say I'm an accidental entrepreneur and I'm extremely averse to risk, unlike most entrepreneurs. And so, I would not assume that, you know, it's going to work. We're going to make it work. Uh, you indicated some caution about signing a 10-year lease before. So, I think you already have that baked in where, you know, you're thinking about the overhead costs before jumping in feet first. Lauren, I'm wondering, you know, we have five 10 minutes left. Max, uh, how would you like to help us, um, land this so that we can send off Elon with something really helpful? >> I think maybe we should ask, um, Elon that question. Have you had a chance to scan the the other uh, comments, Alain? So it looked like there was a a bit of um so again back to this optimism not not to get too optimistic be a little bit more cautious a little bit more careful about that next step which um this has been extremely helpful how will I know when it's time to take on the overhead >> my advice is when you're busting at the seams like when it's we cannot operate one more day in >> this facility in this circumstance in whatever it is I don't know if that's good advice, but that's how I've grown my business so far. >> Got some nodding heads there, Amy. >> And I would just say that, you know, I sell stuff for for5 to $7,5 to 8 a piece. So, it's really it's a volume based business. You know that you're ready to take the next step when you're consistently hitting a ceiling. Like, if you're if you triple production and you're still selling out and you just cannot meet demand. So, Elon, what is your next step? What are you going to do with this information? >> Well, it sounds like I got to dig into my numbers a lot more. Um, and I've got to add in the cost of labor, whether it's mine, whether it's phantom labor or it's labor that we would have to add on to grow >> or have more children. That's the other option. >> Possible. I won't get into that. >> But, um, yeah. So, I got you gota got to dig in a little bit more. I' I've got my spreadsheet with like super detailed numbers, but I really haven't added in the labor. I haven't had it added in all the overhead and, you know, sort of leveled it across all the different products. So, I need to kind of really generalize all the expenses and figure out where I'm at. And it also sounds like I probably need to raise my prices. Um, my my prices aren't I cuz we were catching a happy medium. We weren't too high, we weren't too low, you know. So maybe the way to grow is actually through pricing. >> You say you deliver to people's houses. What is that? How much does it cost? How much you charging? >> The same as I do at the farmers market. So it's, you know, six six for small, but uh two for 10 and then three for 15. But I I end up with $30 orders. Each each order is about 30 bucks. >> And you charge for delivery? >> No. Do you know anything else in this world that you can get delivered to your house for free? >> Half of them are my friends, so I just go and hang out with them. But >> it's a different that's a different ROI. Well, I I want to thank everybody for I mean, you can you can see this picture. Everybody's busting with intense energy to support Elon. Like, we want you to be successful, but um I just really want to appreciate everybody's thoughtfulness and the questions you ask and the things you're offering. I think we've given Elon a great supportive environment for him to do his best thinking. >> Elon, you don't have to. Is there one last question or thing that you'd like to raise? >> I think this has been extremely helpful uh for somebody who's starting out in a world that they haven't really had their focus on for most of their career. Um, this is this is very helpful and just gives me a new perspective and way to look at what I've been working on for the past six months, day in day out, uh, pretty much 24 hours a day, you know, cuz you dream about these things, too. But um yeah, so having this wealth of knowledge, this diverse group of people with different perspectives, different businesses, and uh different ways that they've grown and different ways that they've run their businesses come and help me sort of put it all together to help me sort of figure out where my next move is and what I could be doing better is invaluable. All right, thank you everyone, especially Alain, uh, but also Chris Hutchinson and Katie Huey from Trebuche and our sponsor, Newbridge Studios. Uh, and of course all of you who pitched in. One thing before you go, everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd or by becoming a founding member and joining our monthly Zoom forum where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the Morning Report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone.