Driving Down Costs by Working with Co-Packers with Dan Stephenson, Co-Founder & COO at Daily Crunch Snacks

In this episode, we’re joined by Dan Stephenson, Co-founder and COO of Daily Crunch Snacks; A brand centered around superfood-infused sprouted nuts. 

Dan talks about how he fell in love with the taste and crunchiness of their product the instant he experienced it. 

He shares how that love for the product and his desire to use clean, natural ingredients has shaped Daily Crunch Snacks’ ethos. 

Dan talks about the challenges and opportunities of sourcing your own raw materials, how to engage with, and work with co-packers, and how to think about your margins for Wholesale, Retail, and D2C. 

With years of experience in CPG, Dan had great actionable advice for anyone trying to launch and grow a CPG brand.

Listen on Apple Podcasts here or Spotify here.

Transcript

Ken Ojuka: Welcome to the Physical Product Movement, a podcast by Fiddle, we share stories of the world’s most ambitious and exciting physical product brands to help you capitalize on the monumental change in how, why and where consumers buy. I’m your host, Ken Ojuka.

Ken Ojuka: In this episode, I speak with Dan Stephenson, Co-founder and COO of Daily Crunch Snacks. A product brand focused on superfood-infused sprouted nuts. Dan talks about how he fell in love with the health profile taste and crunchiness of their product. The instant he experienced. it He shares how that love for product and care for the cleaning natural ingredients has shaped their approach to operations at Daily Crunch, Dan talks about the challenges and opportunities of sourcing your own raw materials, how to engage with, and work with co-packers and how to think about your margins for wholesale retail and D2C With years of experience in CPG, Dan had great actionable advice for anyone trying to launch, and grow a CPG brand. Enjoy!

Ken Ojuka: Alright. Hey Dan, how are you doing? Thank you for joining me on the podcast today. I’m looking forward to diving into your journey a little bit.

Dan Stephenson: Great to be on here with you, Ken. I appreciate you having us on. Yeah. Where are you calling in from? I’m actually here in Nashville, Tennessee, home of country music and now daily crunch snacks.

Ken Ojuka: Oh, very nice. Yeah. And we definitely want to dive into the story of Daily crunchy snacks and hear where you came from and your journey. But we do like to kick it off with a quote. You told me before that you had two quotes. Do you want to go ahead and share those quotes?

Dan Stephenson: Yeah, I think they reflect the journey in CPG. The first one is, everything comes to those who hustle while they wait. That’s Thomas Edison.

Ken Ojuka: Yeah. Very nice. Yeah. And what does that mean to you?

Dan Stephenson: To me, it just, a lot of CPG is a hurry up and wait mentality. And it feels like you’re not moving until everything’s moving.

Dan Stephenson: So if you’re always hustling, you never actually sub move.

Ken Ojuka: Yeah. Very nice. All right. And your second one,

Dan Stephenson: Courage. Isn’t the absence of fear, but what you do in spite of it, and that’s an FDR quote.

Ken Ojuka: Yeah, and that’s actually one of my favorite ones. I share that with my kids all the time, and then they play sports and just being a kid, you get nervous about things or get scared about things.

Ken Ojuka: But knowing that even your heroes that you look up to seem to have everything put together and kind of know it all and have all the skills, even they get scared but they continue forward in spite of it. Is that kind of how you view it, you know, what’s significant does that have for you?

Dan Stephenson: Yeah. I’ve kind of seen the depths of both sides of entrepreneurship, the highs and the  lows. And when you pull off that band-aid of fear and you actually just keep moving forward. You realize it’s not as scary as it can be and that inaction can sometimes cause.

Ken Ojuka: Yeah. Yeah, I really do. You know, that’s one of my favorite quotes and it’s sort of like, expect to feel fear at times, you know, and it doesn’t have to freeze you kind of, like you said, with the inaction, um, you can still operate even though, you know, you might be scared about certain things, you know? Um, well, that’s, that’s great.

Ken Ojuka: So let’s kick it off. Why don’t we start with just where you’re from and a little bit about your background.

Dan Stephenson: Yeah. I’d love to. I actually grew up in Shaker Heights, Ohio, east side of Cleveland, and still have a lot of love for the city of Cleveland. So I got back there from time to time, but ended up in Nashville, Tennessee, via Vanderbilt.

Dan Stephenson: So I did my undergrad at Vanderbilt and that’s what brought me to this great city in 2003. I’m kind of crazy to say that.

Ken Ojuka: Yeah. And then what did you study?

Dan Stephenson: I studied economics and corporate finance and really fell in love with economics and in particular, macroeconomics, seeing everything, the big picture behind it, I’ve always had a passion for strategy, and the why, and that kind of gave me that lens to look at the world.

Ken Ojuka: Yeah, it’s always interesting too, to just find out a little bit about people’s backgrounds. I mean did you ever think that you would launch your own product or, you know, be in the CPG space? Did you have that in your head at all at any of that time?

Dan Stephenson: You know, it’s, it’s funny. I’ve always known that I was going to have my own business. I just didn’t know what it was going to be. I had a candy business in high school where I would. Buy wholesale and sell to the kids there and give some of the security guards and teachers. To be my protection, but it was one of those things that I love the movement of products and just how distribution works.

Dan Stephenson: And so giving me a lens to look at it, the world from a bigger perspective, it felt like a great way to. You approach business before I even watch my own.

Ken Ojuka: And so you worked in and in finance for a little while. And then it looks like you launched a mac and cheese business. Can you tell us just a little bit about it?

Dan Stephenson: Yeah. I always had a passion since I was young for food, and so always creating things. And the first thing that I ever made when I was young was Mac and cheese. My mom, I was kind of a coach’s kid and told her that I needed an afternoon meal. Because I didn’t like eating breakfast.

Dan Stephenson: And after a while she. Said enough is enough. You need to learn how to make it. And I was four years old learning how to make mac and cheese, well, full circle. And I made it as a meal for my girlfriend at the time and now wife and it was a hit. I knew I had a great creation and I had habanero and sausage and four different types of cheeses and fresh onions and peppers. And that was the Mac attack and that’s what launched the whole thing. I didn’t know what I was going to do with that, except that I just had a passion for food and just wanted to keep sharing.

Dan Stephenson: And so one of the ways that I express who I am to people that are close to me and people that I don’t know is through food and flavor. So I love hosting dinner parties and had a buddy over the head of the salsa business and said, you just need to start selling this and I didn’t know what that meant.

Dan Stephenson: He introduced me to the director of a Farmer’s Market Nashville and ran with it from there, and started creating my line of gourmet mac and cheeses.

Ken Ojuka: Oh, very nice. And it looks like you did that for about nine years or so. Is that right?

Dan Stephenson: Yeah. So I did that in parallel to working in corporate finance for about two and a half years.

Dan Stephenson: I didn’t start it with the intention of leaving, but I saw a niche within the natural and better for you product segment for where I could fit in. And so I created this frozen product line that we ended up scaling and taking to about 3000 doors around the country.

Dan Stephenson: Before I even really knew what the industry was. I saw a fit for it and I loved how consumers can relate with the brand. We were just Jif, peanut butter people. And when I was growing up and my mom always blacked, crunchy Jif, and there were several other brands like that, that resonated, but I saw that repeat purchase and that emotional connection you could create with the consumer and I always wanted to create that with a product of my own.

Ken Ojuka: Okay. Yeah. And I think that we could probably talk in detail about your mac and cheese business and that distribution. I think today though, we want to focus on daily crunch. And take us from the mac and cheese business to meeting your Co-founders and deciding to launch Daily Crunch.

Dan Stephenson: Yeah. So after I left Dan’s Gourmet. It evolved into having a food truck that sold the mac and cheese. And so that was its own business. And I had a consulting practice and I was part of an entrepreneurs organization here in Nashville. And someone in EO also in EO connected me with Laurel who’s now one of my two Co-founders in Daily Crunch. She and her aunt are working on a project with these crunchy nuts called sprouted nuts. And I’d never heard of sprouted nuts, but I knew how to get products to market and build a brand. So we started, we sat down and talked and just hit it off.

Ken Ojuka: Okay and she was in Nashville there.

Dan Stephenson: Yeah. So she’s in Nashville and she brought samples of this product when we met, and coming from a food background for me, tastes and texture is everything. And so it doesn’t matter how much people will or want something to exist in the world. If it’s not good, you’re not going to get the repeat purchase.

Dan Stephenson: But the first thing is that I tasted these, with this unique crunch that I never had with any other nuts. And so I was immediately intrigued by the product. And then I really fell in love with my Co-founders. And that was a difference that I didn’t have with the first business was a founding team.

Ken Ojuka: Okay. Got it. Maybe you could explain a little bit more about these nuts. I’m sure all the listeners. They’ve had nuts before, what’s unique about, and what captivated you about what Laurel showed you?

Dan Stephenson: Yeah. Diane actually discovered this process in India.

Dan Stephenson: Her sister was going there regularly for spiritual reasons, but all the women would, so they’re nuts in water at night and then eat them the next day. So they brought that process back to Austin. Where her sister was living and started dehydrating them and dehydrating them anywhere from 12 to 48 hours, it gives this unique crunch.

Dan Stephenson: And so now what we have done in the scale up is this soaking and it sheds the phytic acid. So this phytic acid is on the outside of almonds. Almonds actually have the most amount of phytic acid of any food in the world. Actually inhibits digestion. So the sprouting process, our soaks from the hydrate process removes the fight of gas acid, makes it easier to digest, and then hollows it out on the inside.

Dan Stephenson: And then the dehydration pulls the water out, leaving it there. Crunchy nothing is unlike anything else before it actually makes an audible pop that you can hear and see if I can.

Dan Stephenson: Yeah. So, early on in the branding, we knew we had to convey the most important part of this, which was the crunch. Because even though there’s all these amazing health benefits yeah. Even Diane didn’t know at the time we just knew she had a better nut including there’s higher bioavailability.

Dan Stephenson: Your body’s able to absorb more nutrients with this process from the nut. We knew that the most important thing to convey was that crunch. So that’s part of what our job was to do.

Ken Ojuka: And so. Yeah, take us back just a little bit. So when they approached you or when you approached them, how far along were they in terms of developing the brand and having an actual product to sell.

Dan Stephenson: Well, Diane had been selling them to friends in France or gifting them and, or selling them to friends for about 18 years.

Dan Stephenson: But Laurel actually came from 18 years at Unilever in New York City. And so for her, she saw the potential and she’d been snacking on these. So Diane is her aunt through marriage. And so she saw her family. All these picky eaters and just golfing, grabbing these nuts and channeling down.

Dan Stephenson: And for her, she approached Diane about, can we make this a real business? So they were in the early stages of just looking at thinking about packaging and flavors. So I came in before we really did packaging, naming, branding and so we really got to build it from the start. And we each have complimentary skills.

Ken Ojuka: Would you describe those a little bit?

Dan Stephenson: Yeah. Yeah. So Diane is extremely creative in the kitchen. And has this big personality that loves to share with people and is always hosting and she’s able to get great feedback and test things out, and get in front of people and make people excited.

Dan Stephenson: Oral, super, smart marketing, expertise, knowledge, overly bubbly, like just can’t pull anybody in, and then really brings them. This experience from working on campaigns like Hellman’s and Dove campaign for real beauty. And they’re both super genuine. And so when you put the three of us in at any trade show convention, I mean, we can share not only the attributes, but just the love that we have for this product, all of us believe in it and live it. And I think that’s a big thing is that the founders convey the energy and the attributes of what a brand needs to be. And so authenticity has really been a great thing with this foundation.

Ken Ojuka: Right. Right. Well, and, and you talked about, you know, your co-founders, um, you know, their, their strengths and really what they bring to the table. What about, what about you when you know, you look at your skill set, you know, what do you, what do you think you bring to the team? And I know it’s always hard to talk about yourself.

Dan Stephenson: Yeah. I’d say one of the things that I learned out of the first adventure. I gained a sense of humility. And I know that’s not usually an attribute people use, but I didn’t have to make it about myself. And I really was able to be objective because it wasn’t my baby this time, I was able to say, what is great about what  this product is and what is great about the people around me and how do we prop up both of those things.

Dan Stephenson: And so I’ve learned a lot on the operation side of how to bring products to market. I come from a finance background, so I was able to create all our models for pricing and for budgets and projections, fundraising, working with brokers, identifying co-packers, it’s a lot of know-how and things that you have to do when you build a product in the CPG space.

Dan Stephenson: And then allowing Laurel and Diane to run with some of that innovation and that marketing of which they have a lot of experience.

Ken Ojuka: Yeah. Got it. Got it. Yeah. So let’s take it. So you joined the team, what are the first steps that you guys took? That time.

Dan Stephenson: Yeah. So the first thing was actually putting a brand behind this product and we went through a lot of different names and iterations. I think the first version of the product before Laurel and I came on board was the Health Nuts. And we knew that we wanted to convey some, a little bit, a different tone.

Dan Stephenson: But we looked at products that we loved in the marketplace. And two of them that we loved were the RX bar for its ingredients and how they were very clean, transparent. You knew exactly what was in the packaging. The other one was Boomchickapop, we think they’re pastels. They just pop off the shelves.

Dan Stephenson: You go down those aisles at Costco. You can see it from anywhere in the store. And at the end of the day, Angie made great popcorn, but it’s just popcorn. And so for us, we like to say our packaging’s like our X-bar and Boomchickapop had a baby. So that was a lot of the inspiration for the early brand.

Dan Stephenson: And then went through the naming and the hierarchy which I love in terms of how customers read and how it resonates. Those were some of those first steps. Before we started getting into products, flavors and varieties.

Ken Ojuka: Okay. And where, how are you making this at the time? And what was the plan in terms of production?

Dan Stephenson: Yeah. So the soaking process was pretty straightforward from how Diane had been doing it too, even in the scale up. The scale up on the dehydrator is a big change. So, Diane and Laurel are both using what are called Excalibur dehydrators, just a little home dehydrators. And so we knew that in the scale up that we’re going to have to work with a co-packer.

Dan Stephenson: Find out the types of dehydrators out there and know that it would change some temperature and profile, as well as the time. So identifying somebody that already had experience, plus had the dehydrators themselves, was a big part of it. Because you went from making 20 pound batches to 2000 pound batches.

Ken Ojuka: Right. And so, yeah, I can imagine that would be a challenge to find somebody with this expertise and I’m sure the listener is thinking they wouldn’t even know where to start, what tips could you give us about identifying somebody like in terms of a co-packer with that skill set, how do you even go about it?

Dan Stephenson: Yeah, the easy answer to say, talk to people in the food industry, but before I was even in the food industry, I wouldn’t have known who to reach out to and how to go about that or that this whole world of people that only make other people’s products exists.

Dan Stephenson: So one of the ways you can actually back into it is looking at the back of a package and seeing where it’s made. A lot of these places don’t have a really good web presence, but if you think about the equipment that you might need to make your products, even if it’s not the same.

Dan Stephenson: So for example, you could talk, if it’s a dehydrator you need, what are the other dehydrated products that exist out in the world? Okay, you’ve got  kale chips and you’ve got meat snacks and you’ve got dried fruits. So working backwards from the back is sometimes an easy way for people to at least start reaching out, find a city and a town and a name of a company that might be producing a product that uses the equipment that you’ll need when you scale up.

Ken Ojuka: Okay. So maybe you find, let’s say a meat stick, right. You find a meat stick and you say, Hey, these guys have to dehydrate this product. So would you contact the brand then? Or, how do you take it from there? Maybe fill in some of those dots.

Dan Stephenson: Yeah. It’s a lot easier when you come from a position of liking somebody’s product and you’re looking at launching a product of your own and non competing space brands, and entrepreneurs are pretty open to it.

Dan Stephenson: People that have navigated through being an entrepreneur know that they got their breaks from someone like them. And they’re usually pretty open with that knowledge and I’ve met so many great people over the course. Building businesses because success is not a zero sum game.

Dan Stephenson: People know that they can help you and it doesn’t hurt them. And so it’s been, I’d say reaching out to those entrepreneurs and asking them how they built it, especially if you listen to them and compliment, they’re usually happy to share, and at least make a few introductions.

Ken Ojuka: Yeah. And I think that makes sense. And for those who are feeling apprehensive about this, I think, we can point back to that quote, where we started this off with where yeah. You might be a little intimidated or feel a little bit of fear to reach out to somebody like that.

Ken Ojuka: But if you think about it, the worst thing that can happen is they say that they don’t want to tell you, or they don’t ask. Yeah. So you don’t really have anything to lose. And to your point, I’ve found the same thing in my career is that people are usually genuinely happy to help.

Ken Ojuka: They want to share, they love telling their story. They would love to tell you how they helped and how they did it.

Dan Stephenson: Yeah. And you’ve got such a cool platform to be able to get those insights from people, but you’re right. The secrets to building a business aren’t usually closely held by the people that are doing it, there’s a lot of luck in it and a lot of hard work.

Dan Stephenson: So even if you gave somebody the place. They still have to execute and they still have to work hard.

Ken Ojuka: All right. So you found a dehydrator, you found somebody where they were local? How did you go about engaging with them and getting your first run?

Dan Stephenson: They are actually on the east coast and so not local at all and not really close to where almonds come from. We source all of our almonds from Northern California. And we test run a few products with them. Did they’ve never done almonds, or actually never had done nuts before.

Dan Stephenson: And so the learning process was very real, for what could go wrong. So I remember one of the batches when we ran, I swear we, we tried it and I’m like this isn’t right. Chinese food or we couldn’t identify it. And we found out they’d run flavored onion rings the day before. And part of that was there. It’s just a different level of sanitation because almonds absorb so much flavor.

Dan Stephenson: And so that, that process of sitting there and air for as long as we dehydrate them, it becomes, it opens those cores and those almonds to take on whatever flavors are in your dehydration, hydrators chambers.

Ken Ojuka: And that could be a good flavor, though. It sounds like, you could run with that a little bit,

Dan Stephenson: As long as you want, and these aren’t your classic unsalted clean flavor.

Dan Stephenson: Yeah, I agree. There’s definitely room for it. For a general, uh,

Ken Ojuka: Yeah, that’s funny. And so it sounds like there was a process of experimentation to get your product just right. And it, and to be honest, it sounds like you had some experience with this before from your previous businesses, you know, working with a co-packer and how do you think.

Ken Ojuka: How do you think you approached it, maybe some of the things that you did, right. Maybe you’ve seen other people mess up when engaging with a new co-packer?

Dan Stephenson: I think that transparency is really important in that co-packing relationship of what ingredients we’re using how we’re doing a product. And I know that some co-packers aren’t or don’t want to be transparent on where their pain points are for costs, or, the sourcing of materials. So one of the things that we did early on was source all of our own materials. And essentially the co-packing relationship was more of a tolling fee.

Dan Stephenson: So doing exactly our process in their facility rather than letting them own the process and materials and just selling an end product. I’ve done it both ways, but I think that having just a tolling allows you to go and source better. So if I find a better almond supplier, not only in price, but taste, I can make that relationship work rather than depending on the supply of almonds that the second co-packer has. It also helps from a transparency and sustainability perspective. When you’re sourcing ingredients, I want to know each farm. Every ingredient coming from, because that’s more important to our consumer today than it ever has been in the past. Really tough to do if you’re just allowing somebody else to pick those for you.

Dan Stephenson: It also doesn’t encourage the improvement of margins and really encourages someone else to cut corners rather than you to just figure out where you need to get more efficient on your.

Ken Ojuka: Is that something that you would recommend that new brands do, try to source it themselves.

Ken Ojuka: I mean, you said that you’ve done it both ways, what would be your advice, if somebody was asking how they should proceed. 

Dan Stephenson: Yeah. I think in this day and age, you want to be able to speak to these people that you work with, consumers care about it. We have an amazing almond farmer in Northern California.

Dan Stephenson: Who’s the largest, who’s now the largest, bee friendly certified arm farmer in the world. And I have that relationship with him, we can see the challenges they’re having in the supply of crops. We can hear about the successes they’ve had in the drip irrigation district. Said flooding is going on.

Dan Stephenson: We can hear about the difference in quality of almonds, between them and other people and people, and we’re able to share their story. So we can actually feature blogs featuring their story. If there’s a, if there’s something between me and that farmer, if I’m not the point of contact for that relationship, it’s a lot harder to, to really build trust, when you need a favor or as you’re growing to know that they’re going to be a partner, when it’s through somebody else. So yeah, I highly encourage people to try and build co-packing with a tolling fee mentality in mind. So you can drive down to actual costs. If you’re only asking them to produce, you can get to a more efficient place from what those costs are, and how you can improve margin. Because margin is so critical in this game as you know.

Ken Ojuka: Right! And I’d actually like to revisit that one, one last question about, this co-packer relationship, what are some of the let’s just say the pros and the cons are, or maybe some of the challenges, you know? So we’ve talked about some of the advantages of doing it, but what are some of the challenges associated with sourcing it yourself?

Dan Stephenson: It’s a heck of a lot of work. I mean you’ll have 20 plus suppliers bringing products in from all over the country, and then ordering increasing amounts as you scale and size.

Dan Stephenson: When, if somebody else was buying everything for you, it really helps the cash flow because if you’re not paying until say 15 to 30 days after a product’s produced, that’s the first time cash goes out in the business flow. But when you’re supporting sourcing your own ingredients, you’re buying ingredients 60 to 90 days before production day, which means that you’re.

Dan Stephenson: 120 days before you would have paid it, if you had a co-packer, sourcing and making it all for you, so huge shifts in the flow of cash. So that’s where I think some of the advantages are to people that allow the co-packer to source it. So it’s just another thing to think about.

Ken Ojuka: Yeah. Yeah. I think that you’re right.

Ken Ojuka: The cashflow is definitely a concern.

Dan Stephenson: Yeah, like economies of scale. If you have a co-packer that’s already buying, you’re making chickpeas. They are already buying a million pounds of chickpeas from a farm that you go to try and negotiate pricing.

Dan Stephenson: The incremental amount of your a hundred thousand pounds to their million is you’re a hundred thousand pounds on your own might cost, 50 cents a pound, but they’re already at 40. So you get the economies of scale. If you have them, you can leverage their buying power, but they don’t have buying power in what you’re producing.

Dan Stephenson: There’s no real need to have them source it.

Ken Ojuka: Yeah. In particular, if they’re marking it up and that’s one of the reasons why a lot of co-packers like to actually source for you, they’ll mark up the price and pass it on to you. Yeah. So let’s dig into margins just a little bit, you know?

Ken Ojuka: Let’s say that I’m launching a new product, let’s go with the chickpeas example. How do I need to think about my margins? At every level from my cost to produce it to what I expect to sell it to wholesale, sell it for, and then they’ll mark it up, can you maybe explain that a little bit, for people who are a little bit unclear on that?

Dan Stephenson: There’s some rough numbers. We can put it there, but, I would want to be at a 50% margin, goal. So maybe you can’t get there right away, but you’re probably going to have margin compression over time. 50% margin between what it costs you to produce and what you sell it to a wholesaler for.

Dan Stephenson: So that allows you to give you some room to promote, As well as is distributed and they actually put some away for growth. That would be a goal to work backwards from. And then as far as a rough number goes, you can basically taste the price, you sell it to a distributor for and double it.

Dan Stephenson: So if you’re selling a product for $2, you might get some more advantageous distribution. When you go through a distributor, they’re going to mark up anywhere from lowest. You’ll see, for a cost plus will be about an 8% markup, but it will go as high as 35% and then the retailer at once they buy it from a distributor, we’ll mark it up anywhere from 35 to 50%.

Dan Stephenson: We’re in some outlets. For example, like airports where airports want to mark up 60 to 65%. So I don’t make any more on that sale when you see a product selling for $10 because we’re selling for the same price, but the people in between me and that final customer, whether it’s the distributor or the retailer they have varying markups that will, we’ll generally double it from your wholesale costs to your retail price.

Ken Ojuka: Right. Okay. Yeah, I think that those rough numbers are really helpful. And how do you think about that in terms of pricing, on your own site? So going through to see, it’s a very popular way to go to the market. What do you think about pricing on your own site?

Dan Stephenson: Well, I think one of the most important things you can do before you launch is really look at your category, take a hard look at what else is out there.

Dan Stephenson: And you don’t want to be more than 20 min to max, 30% higher up than what’s in your category. There’s obviously examples of brands that have been able to do it. But a lot of times the way that they found success was changing the form factor to be able to be at a more cost I’d say cost attractive price for trial.

Dan Stephenson: And one of the clear examples I’d say is Justin’s. They were nut butter before nut butters. We’re gaining in popularity. So the idea of an $8 to $12 nut butter, when you’re next to Jiff at $4 was a really tough proposition. But they ended up putting single packets out there that they could put in that, next to it so that people could try it and know that something was worth paying a premium for.

Dan Stephenson: So I like really analyzing a category to see am I within 30% of the other options in there, because if I’m more than 30% off, it’s going to be tough to even get the trial.

Ken Ojuka: Understood. Okay. So let’s talk just a little bit about the number of SKUs you guys launched with. I see you’ve got, what is it, four or five different flavors now that you’ve got on your site is it more than that?

Dan Stephenson: We’ve got different bundles, but right now we’ve got five flavors in two varieties. So the first three were our classic sprouted almonds, which actually won the good housekeeping snack of the year or last year.

Ken Ojuka: Congratulations!

Dan Stephenson: Thank you. Thank you. Very proud of that one. And then we also launched with our cherry berry, nut medley. So it’s blueberries and cherries with sprouted, almonds, walnuts, and cashews. So kind of trail mix, but in an elevated sense. And then the third one is our coffee soak sprouted almonds.

Dan Stephenson: So, instead of smoking in purified water, they soak in coffee and take on that rich arabica coffee notes. And so those were the three that we launched with last March at the start of the pandemic.

Ken Ojuka: And if you had to do it all over again, do you think that was a good strategy to launch with the three?

Ken Ojuka: How did that work out for you guys?

Dan Stephenson: You know, three is the minimum number that I would ever launch align with. I’d say three to five is a great place to be five. You probably get some cannibalization for a new brand. I’d say four is a pretty happy number. Where you’ve got, you show that you’re more than just a one trick pony, and you also get a little bit more room on a shelf.

Dan Stephenson: And when I say on a shelf, launching in a pandemic, there were many shelves you were going for. So it’s more e-commerce offerings, but people want to have the ability to try different products, when they order from you or else they’re probably just going to find you from on Amazon, if you’ve only got one product.

Ken Ojuka: Right. Okay so yeah, let’s dig into that a little bit. You guys launched in the middle of the pandemic, pretty early in the pandemic. How was that? And what were some of the challenges and what are some of the advantages from launching at that time.

Dan Stephenson: We launched March 4th, National Snack Day and we were supposed to be at expo west and that didn’t happen.

Dan Stephenson: We got the emails. Notified that the expo was canceled. So that was the start of what changed everything for everyone, but really took us back to the drawing board. And I didn’t know at the time how much it would affect all trade shows being canceled for the rest of the year.

Dan Stephenson: And even in this year, everything is going virtual, people not leaving the house, working from home. What we have is a grab and go mini size and as well as a five ounce pantry, you have to think about the changing use cases and how you’re going to advertise that to people. All the reviews being canceled meant that we were really going to have to focus on getting it to people at home.

Dan Stephenson: So how can we find them and how can we connect with them? So that, that really became, the shifting focus for us. So I’d say, the first three months were kind of a friends and family launch. We launched on ourwebsite, but then in June, July, we launched on Amazon. Three of our, two of our three products that we release were the top SKUs in the home and then, trail mix categories.

Dan Stephenson: So it was awesome. That was a fun way to, to come out and, uh, and share with the world.

Ken Ojuka: Yeah. And so you’ve mentioned, try to connect with people. And I assume on social and online, you know, were there anything, was there anything specific that you guys did that you felt worked, worked well?

Dan Stephenson: We reached out to a lot of people. I knew some people in the industry and I’d say one of the things that Diane and Laurel are awesome about is they’re not afraid to pick up the phone. Shoot somebody a message and just share, Hey, look at our awesome product, check it out. We’d love to send you some.

Dan Stephenson: And so we made some great connections early on and it’s contributed to some of that PR that we’ve gotten, we’ve won five awards and first year of being in business and we’ve gotten some fantastic PR. And I’d say, when you aren’t scared and you’re excited about what you’re doing. People want to hear that story anyway.

Dan Stephenson: And then when the product is good and the team is driven, people want to share it. And then, I think that’s where that PR connects and that really started, helping us accelerate.

Ken Ojuka: Nice and yeah, coming out of COVID, what are the plans? What are you guys looking forward to?

Dan Stephenson: We never stopped pursuing traditional retail, during all this. And so we are now able to do different programs and do sampling and emphasize the, on the go grab and go type of our 1.5 ounce minis. So we are in review for a couple of big retailers, but we just launched in two key ones.

Dan Stephenson: One of them being Meyer in the Midwest. We had a buyer that fell in love with our products. And we have now launched both sizes of 1.5 ounce at the check lane and then the five ounce in the superfood category, the superfood snacks. And so, we’re basically growth hacking is the best way to describe.

Dan Stephenson: A lot of different places where we’re going. So we’ve got an, a mass one, we’ve got 400 national independent stores around the country, through infra and through the ke elevate program that we were accepted to. We’ve got, we just launched in CVS and their health hubs, which are, so we’re between sahalie and skinny dips.

Dan Stephenson: And we’re getting to prove it in these different channels. I really liked testing a lot of different areas and different channels to see different velocities. So one of the ones we’ve been doing a test in is the airport market. And we went into San Francisco airport into a couple of their stores and it’s been flying off the shelves and San Francisco has been one of the hardest hit airports in the country but because of the progress we’ve made there, that we’re going to expand with this national, airport retailer. So those are the types that we like to see. All right. Where, how fast does it move on its own? What kind of campaigns can we test there? And then how can we invest more into that area?

Ken Ojuka: Sure and what would you say your breakdown is, right now, in terms of, D2C versus wholesale, and what’s your goal there, what kind of breakdown would you like to see?

Dan Stephenson: I think D2C was higher earlier on, due the pandemic. But we’ve grown a lot through, K he and through this Meyer and CVS.

Dan Stephenson: And so I’d say right now it’s about 20%, D2C. I would actually like to see that C number end up more like 40%. And so right now we just actually moved to an e-commerce fulfillment center to take that off our plates so that we can invest in growing our website channel.

Dan Stephenson: So while we do fulfill by Amazon and that becomes pretty hands-off on the actual fulfillment side, we’ve been fulfilling our own. I’d say less than half pallet size. And that I think we can turn over. We’ve now turned over to another partner that allows us to focus on building that brand and growing, and all those areas that we want to be in to get up to that 40 person.

Ken Ojuka: Nice. So one of the things that I really like about your brand is that you guys have this mission, this mental health mission. Can you tell us just a little bit about that and how it came up?

Dan Stephenson: Yeah, we have a mission around mental health awareness. So one of our Co-founders, Diane lost her son about seven or eight years ago to suicide when he was at the University of Michigan, he was suffering from bipolar disease and it was going through more than anyone knew. And the outlet for connecting with other people to know how deep that hurt was. And so one of the things. Her family came out of this was developing the World Marine Network at the university of Michigan for the support network.

Dan Stephenson: And so the support network is a peer to peer network that helps students connect with each other to reduce the stigma of mental health and find help. And we believe as a company. There’s a real connection between what you eat and how you feel. So beyond the support network, being a great group and reducing such a critical age for when mental health issues really pop up and turn that those college years we really feature.

Dan Stephenson: People that are open, with their mental health struggles, because we all have them and it’s okay to not be okay. And that’s one of those, it’s one of those things that the stigma still exists. And what we want to do is keep reducing that stigma. People have been open and honest with their struggles with weight or disease, but mental health has been one of those that the stigma has not been removed.

Dan Stephenson: And mental health awareness month was May and we did a matching for the support network. And we got donations from people all over the country. Not only donations, but we have buyers that we’ve met with and people that we met with and customers that say how much, what we’re doing.

Dan Stephenson: Really makes a difference because everybody has someone in their life, even if it’s not them personally, that is dealing with mental health issues. That’s been a real rewarding focus of building this business as well.

Ken Ojuka: Yeah. Yeah. Good for you guys. It’s great. Because one of the things that I, at least I’m hopeful that we take from COVID is a little bit, lessening of that stigma for mental health.

Ken Ojuka: I think people have struggled during this pandemic and in many different ways and it’s heartening a little bit to see people be able to express that and open up a little bit about it, you know? I know we’re not there yet, long way to go, but hopefully we’ve made a little bit of progress there.

Dan Stephenson: Yeah, that’s our hope and I think that our part is a brand that is getting great PR and social following so that we can share the stories of people that are overcoming it and okay with not being okay. And it’s so cool to hear about how not only the support network. The brand is helping shine a light on some of that.

Ken Ojuka: Oh, that’s great. That’s inspiring. Yeah. Let’s switch to the quickfire round done before we actually started recording me and you were talking for a little bit and I realized, we could talk forever. Let’s wrap this up here. We’ll go to the quick fire round and then get a few parting words from you.

Ken Ojuka: So four quick questions. Just tell me the first thing that comes to mind. All right. What’s one tool or resource that has helped you the most in your current career?

Dan Stephenson: Fiddle, does that even a question.

Ken Ojuka: And I, and I love that answer, of course right so.

Dan Stephenson: I’ve been building models and spreadsheets with both costings and inventory flowing in and out. And when I saw that the fiddle was an option to connect all those. I was like, all right, sign me up for whatever demo you got. And we’ve just started implementing it three weeks ago and couldn’t be more impressed so far.

Ken Ojuka: Oh, that’s awesome. That’s awesome. And we’re very open to your feedback especially with your experience, you know, modeling costs and, you know, we’d love to bake some of those learnings into the product to help other people.

Dan Stephenson: I’ve got one. Building an AI predictive nature I’ve dropped that one on him, but I’m going to drop it on the podcast.

Ken Ojuka: Okay. We’ll get right on it. What’s one book that you could recommend to people,

Dan Stephenson: Shoe Dog: by Phil Knight.

Ken Ojuka: I absolutely love that book. 

Dan Stephenson: I’ve never written a letter to anyone after reading a book, but I wrote a letter to Phil Knight of Nike.

Dan Stephenson: I mean it’s the most incredible story of entrepreneurship and the real struggle behind it. It’s so raw and open that I was compelled. I had to reach out to Phil.

Ken Ojuka: That’s awesome. Yeah. I listened to it on audible and it’s one of the few books where I finished it and immediately started it all over again because I liked it so much

Dan Stephenson: That speaks to it. I mean, If you’re an, even if you’re not an entrepreneur, but if you’re an entrepreneur hands down, it’s a must read. Must listen.

Ken Ojuka: Yeah and I think it touches on, I think it, I don’t know, it touches an entrepreneur in an interesting way because we all know Nike and we know just what a force that brand is. And then hearing the story of the humble beginnings, real struggles that they went through in the very early days. I mean, it’s, it’s amazing

Dan Stephenson: Three times. I mean, do you, I mean, kind of, did you think there was a chance that Phil Knight could write a whole book that doesn’t talk about Michael Jordan? It doesn’t cover Michael J. I mean, no kidding. I didn’t think that was possible, but that’s the reality of the Nike that he built, which I didn’t even know about.

Ken Ojuka: Yeah. Not a great book. What is one piece of advice that you’d give your 21 year old self?

Dan Stephenson: Follow your passions, don’t focus on the world’s perception of you and, don’t be afraid to fail. So just follow those passions and see where it will take you.

Ken Ojuka: And who’s one person in the world that maybe somebody that you look up to that you would love to take to lunch.

Dan Stephenson: And I’d love to go to lunch with Richard Branson. Cause I think lunch could turn into skydiving or kite surfing pretty quickly.

Ken Ojuka: Yeah. And not to mention you have a, you’d have a thing or two to say about brand.

Dan Stephenson: Yeah. But if you could do it from 14,000 feet, right. It might be even more impactful.

Ken Ojuka: Are you a skydiver or have you done that?

Dan Stephenson: I’ve done it a couple of times. I wouldn’t call myself a skydiver, but I’m kind of a thrill seeker. So, whatever’s available to me, I’m going to say yes to wait. My buddy took us all to race CA Corvettes last week in Bowling Green. And that was the most recent thrill. And it was fantastic.

Ken Ojuka: I’ll race Corvettes! I don’t know if I jumped out of a plane though. I’m not that brave. Let’s say that

Dan Stephenson: You don’t know what you can do until, tell your wife, look back and tell you to man up.

Ken Ojuka: All right. Hey Dan, I appreciate the conversation. I think that, there’s some really good lessons in this. What advice would you give to other entrepreneurs, other people that are in the CPG or physical products space, maybe other food entrepreneurs, what would you say to them?

Dan Stephenson: I’d say surround yourself with people smarter and more experienced than yourself. I know that can be intimidating sometimes, but just defer to them and if you can be around them and then when you get in that moment, listen more than you speak. If I can be around people that have great experience, I shut up and listen, I’ll probably get a lot further.

Ken Ojuka: Yeah. Awesome. Well, that’s a great place to leave this off. I appreciate you taking the time and jumping on with us, and wish you the best of luck with Daily Crunch.

Dan Stephenson: Appreciate it, Ken. We’ll talk soon.

Ken Ojuka: All right, talk soon. Bye.

Ken Ojuka: The Physical Product Movement Podcast is brought to you by Fiddle. To find out more about Fiddle and how our industry leading inventory ops platform is giving modern brands and manufacturers full visibility into their inventory and operations.

Ken Ojuka: Visit Fiddle.io, and then make sure to search for Physical Product Movement in Apple Podcasts, Spotify, Google Podcasts, or anywhere else podcasts are found. Make sure to click subscribe. So, you don’t miss any future episodes on behalf of the team here at Fiddle. Thanks for listening.