In this episode, we’re joined by Jessi Freitag, a Business Operations Consultant, Podcast Host, and Producer at Startup CPG and Iroh’s Corner. Jessi is a great person with incredible expertise in business and marketing operations.
She was previously the Director of Marketing and Operations at LivBar, a certified organic, superfood, and nutrition bars manufacturer and seller. During her time at LivBar, Jessi helped the company grow from manufacturing in a small 700 square foot upstairs kitchen to a 12,000 square foot facility, going from employing a couple of employees to thirty.
How did she do that? Find out how Jessi created a strategic and well-detailed plan by listening in the link below!
Jessi also gives practical advice on whether companies should manufacture in-house or work with a co-packer, how to take customer feedback and apply it to your product or business processes, and working with KeHE.
Listen on Apple Podcasts here or Spotify here.
Ken: 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
Taylor: Hey, everyone. Welcome back to the Physical Product Movement podcast. Today’s guest is awesome. You guys are absolutely going to love this interview. Our guest is Jessi Freitag. She is an operations consultant and a podcast host in the CPG space. At the time of the interview. She was also the Director of Marketing and Operations at LivBar.
Taylor: But since then, she decided to pursue her consulting services full-time. She’s also the host of the Startup CPG podcast and her own podcast, Iroh’s Corner. Jessi shares some cool insights from an operations perspective that we don’t typically get to hear on this podcast. During her three years at LivBar, she helped them grow from manufacturing in a small room to a 12,000 square foot facility. She went through multiple rounds of funding with them and helped them grow the company to over 30 employees. She talks about the big advantages of manufacturing in-house and some of the drawbacks as well. How the operations team works with marketing and sales to scale the brand. The exciting efficiencies you can find when you look for small operations improvements every day. How they went from selling online to also selling at Whole Foods, Sprouts and other retail locations, and a lot more. So get ready to take a lot of notes and enjoy the interview.
Ken: Yeah. Hey Jessi. Welcome to the podcast. I appreciate you taking the time to jump on how you are doing.
Jessi: Hi, Ken, I’m super excited to be here. Thanks for having me doing really well.
Ken: I was just on your podcast and now you’re on my podcast. And so I’m glad to be switching places a little bit, because last time we talked, I had a million questions that I wanted to ask you. And so here’s my opportunity.
Jessi: Yeah it would be good to reverse who’s in the interview chair. So I love it.
Ken: Yeah. For this podcast, we like to kick it off with a quote, maybe something like a favorite of yours that’s impactful or inspiring in some way. Do you have one in mind that you can share?
Jessi: Yeah, absolutely. I was thinking about this. There’s a lot of really amazing quotes, but one that I’ve been particularly reminding myself of lately is be curious, not judgmental.
Jessi: And if anyone has been watching Ted Lasso, Ted attributes that quote to Walt Whitman, which would she check his notes it’s not a Walt Whitman quote, even though it sounds like it could be, it came from Column in 1986, as far as they can tell is like the first reference. But I think it’s just, it’s such a good short.
Jessi: Be curious, not judgemental, whether you’re talking to a person, whether you’re looking at a process, whether you’re going to a new place. Just the thought process to suspend judgment for a second, because of course we always are immediately wanting to judge things because it’s part of surviving and being alive, but being able to remind myself to put my place in, be curious for a moment, suspend your judgment and just be curious about what’s happening so that you can really allow yourself to have new experiences, to see new things, to see things that you maybe wouldn’t see before. Just ask my brain to hold that on pause. And it’s just been a really cool quote to remember. And I got a little sticker for my laptop that has Ted Lasso and I quote on this. So I’ve really been enjoying it lately.
Ken: I think you should definitely attribute it to Ted Lasso instead of advice Column randomly, it just sounds better. Or maybe even just Walt Disney. Let’s just go with that.
Jessi: Yeah, there we go. Choose a different Walt.
Ken: Or Walt Wittman, I guess is so it was, but Disney sounds good too.
Ken: Yeah, it does. You work at LivBar and you’ve been implementing a lot of the operations, manufacturing and all that. So I think that this would be a really information packed podcast for those that are looking to get into operations, to maybe do what you do to work with an exciting fast-growing brand like LivBar, but why don’t we just, why don’t we start with a little bit about yourself and your background and then how you got to where you are now?
Jessi: Absolutely. So my background I’ve been in. Marketing, Operations, Sales for a long time in a lot of different industries from the legal industry to I’ve done a little, it work. I worked at Adidas for a few years in marketing and operations and what it always comes back to is wherever I’ve tried to do sales and other things.
Jessi: I like to try to be a versatile player but I always come back to wanting the core of the business to run more efficiently. And so I always end up with some tint of operations in what I’m doing, because I want to help things run better. And so I had done a nonprofit turnaround with the CEO of LivBar previously in my career where I came in.
Jessi: It was supposed to be a sales job, but again, I was like, I think I can really help with the operations and marketing. So I transitioned my role and then went on to do Adidas and some other things. And then this opportunity at LivBar came up where Wade called me and was like, Hey, we have some founders of a local company that are looking for help scaling their company.
Jessi: And I think that you could come in and blend your operational and marketing expertise. And I was like, that sounds off. And so, LivBar essentially was founded by a local couple here in Oregon. And they came up with this amazing product, but they had other businesses that were already successful, that they were running and they were like, this is awesome, but we don’t have time to become supply chain experts or figure out how to buy ingredients in bulk versus buying them at the local health food store.
Jessi: And we’re selling a hundred thousand bars on Amazon and we can barely keep up with that. And we think that we think there’s something here, but we just don’t want to become an expert in these things to make it happen. We know it needs to scale, but doing it the way we’re doing it now over on a larger scale is just going to be exhausting.
Jessi: So we’re looking for some help. We still want to maintain part ownership, but we need a new leadership team essentially. And so Wade and myself and a sales director came and we had two part-time bar makers that were helping us at the time. And that was three years ago and we were in a little 700 square foot upstairs kitchen with no elevator, just a set of stairs to get a talk about physical products movement.
Jessi: You’re taking a physical product from an alley, rolling it through the lower story of a building. And then taking it up some stairs into a kitchen and it’s okay. Yeah. This is going to have to look different to scale. And now we’re in our own 12,000 square foot facility with its own loading dock. We’re SQF certified.
Jessi: We have our organic non GMO gluten-free certifications. We’re one of the few bar companies that self manufacturers have continued to self manufacture while scaling. And then we’ve gone from those couple employees to 30 employees. And we’re now in about 2000 retailers nationwide. Sprouts is our largest customer, but we’re also in a lot of Whole Foods and some other smaller chains regionally across the U S and it’s just been a crazy journey of going from all right. How do we get a bar to 10 different retailers to now 2000 retailers? And my job has really been to have an eye on the scaling and be sure that we can meet the demand now? And are we also preparing to meet the next level of demand? Do we have enough people? Are we making the process efficient enough?
Jessi: We’re buying cacao butter from here now, but in six months when we need it in higher quantities, I need to have my eye on that now, so that those things are happening. So all of those different scaling pieces have been my area or figuring out we used to outsource shipping, now we do it internally. Those kinds of pieces are trying to solve those challenges.
Jessi: So that Livbar and the rest of the team can focus just on growing and selling and marketing and getting more LivBars into the hands of the consumer.
Ken: Okay. Yeah. Excellent. So lots to unpack there and I definitely want to, I want to double-click on some of those things. So what’s your official title? What is your job?
Jessi: Yeah. Director of Marketing Operations. I think essentially what my job comes down to in a day is what’s the, is there a gap where no one else is that I can go in and fill and then either turn it into a job and hire someone for it or continue to be something part-time that I do. So I’ve done everything from shipping to being the production manager, to making the bars to doing ingredient contracts to insurance negotiations to doing the fulfillment. So it looks a little bit different every day. And as we’ve scaled, it’s definitely looked a lot different from year one to now year three, where, you know, now when you have 30 people, I’m not out on the manufacturing floor as well, maybe as much as I used to be.
Jessi: So it’s really a role of where’s the biggest fire or the biggest hole that we don’t have someone, or we can’t hire someone yet fully qualified for that role or like an expert in that role. And I could jump in, learn what I need to do, like for example, we weren’t able to hire a food safety coordinator right away when we were getting SQF and we just didn’t have the money.
Jessi: So I went and took a class on how to become a PCQI, a Preventive Controls Qualified Individual. It’s like a 60 hour class. I went and took it. Got my qualifications, learned how to do it, got us through our audit. And then at that point it was like, all right, we passed the audit. Now we can, now we have enough in this amount of time, we’ve secured enough funding to be able to hire a person to do that.
Jessi: So that’s a lot of what my job is, finding those gaps, filling them and then finding the right person to take it over full-time.
Ken: Yeah. And it’s interesting because I think some people think these types of jobs are involved in manufacturing or whatever’s is, maybe dry or boring or something like that. But I just didn’t hear your voice.
Ken: I hear the passion and the excitement about your job. So what I’m wondering about is what do you like about it? It seems maybe getting your hands in a whole bunch of different areas. That’s fun and engaging and exciting. It’s not the same every day, but yeah. What do you like about what you do?
Jessi: Yeah, I think it’s definitely doing things a little different all the time.
Jessi: It was great working in a company like Adidas. There’s nothing to knock working at a large company. It’s really great for a lot of people, but there’s a really long lead time and whatever you do, I would work on a system that I wanted to implement, and it would come out in nine months to a year and then be fully implemented. Another two years at LivBar. When I came on board, I was like, Hey, there’s something not working on the website. Can I build a new website? Our CEO Wade was like; Sure, go for it. So I built a new website and within a week we had a new website up and running that was faster, integrated better with it, everything. And so that ability to just immediately make things happen and see the impact or hire the person that I want to hire for the role without red tape or having to wait.
Jessi: I think it’s the immediate ability to see the impact of what you’re doing. That I really love and just the variety. And I’m like, I’m definitely a little bit of an operations nurse. So I love any time I can implement a different software or my team likes to make fun of me cause they’re like, oh no, what new tool that Jesse find this because I’m like, I just found loom and now we can start doing these like screen recordings or let’s get set up on
Jessi: once we got to 30 employees, I was like, let’s use a tool like Slack or we use Trello for a lot of our project management or even implementing like manufacturing resource planning software or using like EDI, like electronic data exchange, like interchange to get POS like all those things where I can bring in a software and get to use it to make things more efficient and teach other people that software can be fun and not overwhelming, and it can help them in their job that always is really satisfying to me like when there’s that change management piece of people are like, ah, I think we can’t do it any faster. We can’t do it any better or we’re afraid to do something new and where I can come in and be like, Hey, actually, it’s going to be okay. And this is going to make your job better and convince them and show them that it can be faster.
Jessi: And then seeing their job get better and them taking ownership and then just running with it. It’s really cool. And just to see all of our LivBar team members really grow into their role. When I started, I had my eye on a fulfillment person that I wanted to work with. They had so much expertise, but we weren’t ready for that person.
Jessi: And so when I was finally able to hire that person, and when I go to the warehouse and to get to see that person driving the forklift, filling all the orders, running the inventory system and just totally owning their job, I just love seeing other people thrive and being able to be a part of that.
Ken: Yeah, awesome. Awesome. So I realized that we mentioned what LivBar is, but why don’t we dig into the product just a little bit more? What makes it unique? You mentioned that there were some people in Oregon that created this, the original founder, but they didn’t have time to, to grow it. They thought it had some potential, but they needed some help.
Ken: Maybe describe what the actual product was and maybe why customers buy it. And then I’ll just follow up after that. But why don’t we just go into that point?
Jessi: Yeah, for sure. So LivBars are baked organic nutrition bars. So most energy bars are going to be, and I’ve been to the co-packing facilities. Like 90% energy bars are made at these big, huge facilities.
Jessi: There’s only, there’s a limited number of them in the U S and they’re made on either an extrusion line. So they’re going through like how sausage is made. You throw the ingredients all in and then something goofy and date pasty comes out, which is fine. It’s just, it’s a style of energy bar. And then you have more of the hard nut bar like what maybe a kind bar is or something where it has like big pieces of almonds and that’s run like down a different type of line. And very few people bake energy bars. And so this is a seed based bar to be accessible to people that have nut allergies, it’s packed with superfoods and then it’s baked actually by hand in Oregon, we work really hard to keep that homegrown feel to it. And then it’s packaged in a compostable wrapper. We have the only home compostable wrapper on the market right now, which is another interesting supply chain challenge that we’ve had of sourcing compostable material as a small company, trying to lead an industry change.
Jessi: So yeah, so it tastes really different. It’s crunchy and chewy. It doesn’t melt because it doesn’t have any chocolate products. It doesn’t freeze because it doesn’t have any hard sugar syrups in it that are going to freeze. So it’s not going to break your teeth when you go on the mountain. And the reason I joined Liv Bar is because I was like, oh, another energy bar, like great.
Jessi: The world needs more of those. We already got like 200 of them, but when I saw it I wanted to see other people’s reactions to it. And when I went to a fancy food industry show for the first time, we were saying we were one of 60 bar companies and we were sampling it and I was deciding, do I want to get into work doing this at LivBar and the way people’s faces lit up when they try it. They were like, oh, this is actually different from the other 60 bars I’ve tried today. This actually tastes good. This is actually tasty. This tastes good. And seeing their faces light up and the smiles on their faces and the surprise and delight of just, they didn’t think an energy bar at this point in their life could surprise them.
Jessi: And that’s continued to be the response we get from customers. And so I think I really love seeing that piece and it was designed by a nutritionist. So this, our founder, Jan, she’s a nutritionist. She works with clients she’s really involved in their lives like taking them, shopping, exercising with them. And whenever they get to the energy bar aisle and the clients are like, what do I eat when I’m on the go?
Jessi: She was like, I’m sorry, there’s just not an option that I feel really good recommending to you. And at some point they were like, can you make me one or teach me how to make one? And ultimately, they wanted her to make them because once she made a test batch, they were like, oh, now we just want to buy these all the time.
Jessi: So it was really founded in versus being some, a product that was came up within a lab, or really designed to be like, how are we going to hook customers? This was very like, how do we get it? How do I solve a need for my clients? How do I feel about them? How do I help them feel better? Create something that’s made from real food that when you look at the back of the Livbar, we actually print the ingredients in a large print font because we’re proud of them and that’s not always normal in the food industry.
Jessi: So to be able to put a product out there that is something that we’re really proud of. And we do think it’s really different.
Ken: So was it primarily the product that convinced you then to come on board? What other criteria were you looking at to make your decision?
Jessi: Yeah, definitely. I wanted to be behind a product that I felt good about and the compostable wrapper too. And with so many products, just creating more single use plastic and the environment. I wanted a product that I could feel good about if it was going to be a single use. And because of the compostable factor, it tasted good. We’re sourcing good organic quality ingredients. That was important to me. And then just the team I’d worked with our CEO, Wade before, and there was lots of opportunity to do different things and try different things and experiment.
Jessi: And I’m working with someone that I’ve worked with before, there was a lot of latitude to be like, I want to set this up this way or scale this way. And like I said, I’m not a huge fan of red tape or having to get approvals for things. So to be able to come in and be like, this is how we’re going to do it and give it a try and adjust.
Jessi: I like to be that iterative process and to be able to just go do things and see what happens and make stuff happen real fast and adjust and reiterate over and over just always testing and always retrying things or finding a way to do it better constantly. The ability to do that was really appealing to me. And that’s really what I’ve been able to do. And what has made it, what has made it fun everyday.
Ken: Yeah. And so you guys have seen quite a bit of growth, obviously you can describe how your team has grown. I want to go back, okay. You joined the team and you’re starting to build out some of these processes.
Ken: What were some of the most important things that you had in mind that you wanted to implement right away? And how did you guys then start to actually scale like the sales and marketing side?
Jessi: Yeah. Great questions. Yeah. So some of the initial processes, I definitely purchased ingredients, was one of them that was really important to me.
Jessi: We’re on organic products. So when you’re organic you have to trace everything essentially back to the farm. Really, you do have to trace all the way back to the farm source and there’s lots of different suppliers for getting organic ingredients but what I was initially concerned about as I was like, we’re sourcing from really small suppliers that the volumes we’re getting now are great.
Jessi: But as soon as we start to run out or there’s no backups for anything, say there’s a shortage of raspberries. There is right now, what am I going to do if something runs out? Or what am I going to do if our business 10X is over the next three years like it has? Trying to plan for those kinds of things and be like, we need other suppliers.
Jessi: Like I need to be out talking to people. I need to learn about ingredient contracting. So that was something that initially I was like, let’s get a process on finding new vendors. Figuring out what our volumes are going to be starting to forecast and then establishing relationships with vendors that can be good long-term partners.
Jessi: So we’re, I’m talking to them saying, Hey, I’m going to buy a quarter pallet from you now, I’m going to buy a pallet in a year. And then in three years, I’m going to buy a truckload. Let’s talk about our relationship through those different stages and working through the right different suppliers for those pieces.
Jessi: The other piece was just really making the production part, making the bar efficient because we have a huge opportunity not being co-packed to control the cost of our manufacturing. When you’re co-packed you go in, you say, make my product and they say, Hey, it’s going to cost as much pretty in it. And that’s it because you don’t control anything else.
Jessi: So we have a huge opportunity to control our costs. Ultimately pass that cost savings along to the consumer on an organic product of wanting to get more organic products into the hands of people. So that was another thing I was like, all right, how do we create operational excellence so that we can ultimately pass these cost savings along and make things more efficient among the team?
Jessi: Is it you take three. If you’re taking three extra. Every a hundred times a day, put something in this bucket. What if we just move the bucket closer to you or just for those really basic things that you don’t think about until you do them over and over. And you’re like, hey, let’s just move this little thing.
Jessi: And then you’re like, oh shoot, like those outside perspectives, stepping back and being like, huh, what are those little things? And I grew up on a farm and my dad is always looking to make things faster on the farm. We would, we’d be loading trucks and he’d be like, if we save 60 seconds, every time we load a truck, think about how much time we save over the whole course of harvest.
Jessi: And he was always thinking about those things. Kind of the lens I tried to bring to LivBar initially of where all those little pieces or just my outside perspective, or even grabbing another person like me and being like, Hey, come look at this, look at how we’re doing this. What are we, what could make this even 10 seconds faster, add one less arm movement when you’re physically making a product too, you have to think about the toll on people’s bodies and ergonomics.
Jessi: And so, I really wanted to make those different pieces more efficient. And then on scaling them the sales and marketing pieces. I had to work really closely with our sales team at the beginning, because when we’re, when you’re in a constrained facility, you don’t want to sell too much, but you also don’t want to go to a retailer and say, oh, we can’t fulfill.
Jessi: So it was a constant balance. We joked that I joked with our sales person, Ryan. He was always saying, I live to make operational challenges for Jessi by selling too much stuff. And I was like, bring it on. But we just had to stay in really close communication so that he understood our capabilities and I understood what he was out there.
Jessi: So that I could be thinking ahead if he’s like, all right, I think we’re going to, we’re going to be going after Whole Foods. I’m like, all right, what is that going to look like? What distributor are we going to need? What kind of at the time we didn’t have office help. So what kind of setup paperwork is there going to be?
Jessi: What kind of item numbers do I need for the product or setting up like you’ve got barcodes and all those different pieces. So making sure that it all set up close communication between sales and my role was really important and it’s still really important. They understand the capabilities and I’m constantly building to be able to fulfill what he’s out there.
Jessi: Selling, selling, and similar in marketing was initially I was had 50 to 25% of my time in marketing and it initially I was, I really wanted to get the company ready to scale and we had someone selling and so marketing, wasn’t a huge focus over the last year, especially we’ve hired. We’ve got five people now in marketing.
Jessi: And so I wanted to make sure we have, again, the systems and processes in place for if the marketing team is out there and gets an article in the New York Times. We’re going to get a lot of website orders. So do we have the system set up for that? I didn’t want to go pitch a national news agency if you don’t, if you don’t have all the systems set up in order to fulfill those kinds of volume orders and so it’s always been a juggle and a balance between those to make sure we’re in super close communications with each other.
Ken: I’m trying to think of some tips, right? So you guys are set up where you’re doing the most, or if not all of this in-house are you also fulfilling in-house?
Jessi: We are, yep.
Ken: And from your perspective, right? I don’t know if there’s a right or wrong way to do this. You can use a co-packer and a lot of companies are having
Ken: success with a co-packer, but you can also make the decision that you want to do it in-house. And so, if somebody has a brand and is considering whether they should manufacture in-house or they should use a co-packer, what are some of the things you think that they should think about? What are some of the trade-offs that they’ll be making while making that decision?
Jessi: Yeah, that’s a great question. And I’ve got this question a lot, talking to other brands. It’s a tough one. And I think it comes down to also what you want to spend your time on and especially if you’re a small team, if you’re going to self manufacture, you can’t overestimate how much time that’s going to take to do your own manufacturing.
Jessi: It’s very time consuming. Manufacturing is complex. We’ve been lucky to have operations minded people on our team and consultant friends that were able to advise on supply chain or we’ve had a good network to support it. But if you haven’t scaled something like that before, if you’re not familiar with the process, it’s a lot.
Jessi: And that’s the reason the co-packers are there. And most people go to co-packers. So there’s definitely a level of efficiency and scale, but you’re just immediately able to achieve. I think the other thing you have to remember though with a co-packer is there are great co-packers out there, but they’re also, they don’t just make your product. They have to make a lot of people’s products. So you really have to watch out for yourself. So either way, you’re going to have to watch out for your business either it’s your own, watching your own manufacturing and making sure you stay true to your core, or you’re working with the co-packer to make sure that the quality is maintained, that the sourcing is working, that all those other different operational pieces, you still want to make sure that you’re getting the product you want at the end of the day.
Jessi: So it’s not, if you get a co-packer, and say it and forget it. There’s still lots of pieces of the relationship to maintain, but I think it’s, do you want to become an expert in manufacturing and build a manufacturing team? Or do you want to focus on other areas of the business? If you’re co-packed you still have to maintain that relationship, but it may free you up to do some more sales or some different marketing.
Jessi: It’s a little bit of a trade-off of what you want to learn and get into and what you focus on for us. Having a lot of, like I said, operations minded folks on the team we wanted to bake the bar and that wasn’t really a capability that co-packers had. You would have, we’d have to be in a different type of facility since there aren’t really baked bars and the other baked bars on the market
Jessi: aren’t co-packed so it’s also, if you have a product that can be co-packed. Then sure, there’s probably a lot of opportunities for you to get quotes from different people or learn about it, but you have a product that’s hard to co-pack and you really want to maintain some point of differentiation like for us, it was really important to stay, to continue to bake the bar. And so it was like, then it’s a choice between being co-packed or…
Ken: What about business-wise and in terms of lead times and costs in order to produce your product, what do you think some of the differences are?
Jessi: Definitely. I think, like I mentioned a little bit before, like when you’re co-pack, the costs are fairly set. There are some co-packers where you’re sourcing the ingredients. Some co-packers will be sourcing. So there may be some level of control you have over the cost of ingredients, but you’re not going to be able to control the costs to run the line for the day. And there’s also going to be a minimum.
Jessi: So if you need, if you want to do a test run, there is gonna be like, yeah, have fun with that, doing that somewhere else. We need to run our line with paying customers or 50,000 order minimums or whatever. So there’s not that flexibility there, maybe, where, when you’re doing your own manufacturer, yes. You have to think about the cost of not making your own product for the day, but you could have
Jessi: more control. You can adjust. So your costs of labor are a lever. Your packaging’s a lever. Your sourcing is a lever, your overhead is a lever. So you have a few more levels of levers to control the costs when you’re doing it yourself in-house versus from the co-packer but it also is really, there’s a lot of complex pieces.
Jessi: So, if you’re doing your own manufacturing, like I mentioned, we’re an SQF facility. So that means having a food safety coordinator and SQF practitioner, a backup SQF practitioner, it means having rules around receiving, like we had to build this giant like hundred foot wall in our facility to become SQF compliant just with the layout of the building.
Jessi: So there’s these kinds of costs that you also have to calculate and be like, is it cheaper to be co-packed or is it cheaper to build out my own facility and over what number of years is this gonna be better.
Ken: And then of course the costs of not only building out or modifying your facility, but the cost of all the machines that you have to invest in order to produce the product.
Ken: So even with those additional costs, you did mention something that I don’t think people think about enough, which is, the flexibility that you, in terms of product development, to testing out different flavors or innovating on your product, even testing out different packaging and things like that. And you just have mentioned some of the levers that you have, but you have those as well, and it allows you to innovate very quickly.
Jessi: Yeah. Or even just innovating on a current product set of being able to say, guys, let’s move around the layout of how we’re doing and see if we can make it, we did this a couple of weeks ago.
Jessi: We’re like, let’s move some people around. We asked our employees that are out there all the time for their ideas. And pretty soon you’re making, you’ve just increased your productivity by a third. That’s not going to happen, hopefully your co-packers probably, they probably have a lot of those operational efficiencies.
Jessi: If you say, Hey, can you guys just see if you can make our stuff faster? Yeah, probably not. We’re like we’re making it as fast as we can, but when you’re doing it on your own, you can be like, what if we adjust the process or what if we change how we do this ingredient and see if it maximizes the flavor?
Jessi: What if we toast the seeds differently? So you can even play around with your existing product line and maximize for flavor and maximize for efficiency. And it is, it definitely can be nice to have those flexibilities, if it’s something that you want and it’s not the right fit for every product or every business, but it can definitely be super helpful.
Ken: Yeah. Yeah. And I think it’s something that I get because I wasn’t always into manufacturing and especially just the physical aspect of running a manufacturing facility. That’s not always my first, I’m a software guy, but I’ve worked with a lot of manufacturers and I’ve really gained an appreciation, a respect for that job and how difficult it is.
Ken: And even just how creative and smart and operationally minded that you have to be in order to do it. And just because somebody opens up the manufacturing facility doesn’t mean they’re going to be good at it. It’s a very tough job with a lot of skills that you need to have in order to do it. Yeah, I recently just talked to the CEO of Solo Brands.
Ken: These guys are growing like crazy. You would probably go public before too long, but acquiring a lot of other brands and these guys make a Solo Stove. Just think of it, like a fire pit that you can, the portable fire pit, but it’s got, that’s under selling the product. It’s actually pretty cool. But even with that product, that’s not your typical food brand that we talk to on this podcast.
Ken: But even then he made the decision that he wanted to manufacture and fulfill all of that in-house right. It was not an easy decision, but he talked a lot about this ability to innovate on the product just much quicker. And that’s primarily why. And so do you guys maybe have an example of feedback that you were able to get from a customer, and then you were able to take that feedback and apply it to your process and change your product in some way or change your process?
Jessi: I think one fairly recent example, I think for us would be that we had, when I started, we had two vegan flavors and three vegetarian flavors and overtime, we got the feedback in ourselves too. We were like, why aren’t, why don’t we just make all the flavors vegan? And the two vegan flavors came later.
Jessi: And so the original formulas hadn’t been developed to be vegan, but it was like, it’d be great if we were all vegan. And we had some customers that were like, I can’t do honey or I don’t eat honey. And so that was something where we were able to, all right, let’s run, let’s do some test runs where we change out some of these existing product lines, where we swap out coconut nectar or date syrup, date nectar, these different alternatives to honey that are a sweetener and a binder.
Jessi: And that is still like a real food product without going to some sort of refined syrup kind of thing. And so we were able to do those runs in our facility, tested out, and see the coconut Nectar’s stickier than honey. And what’s it like to deal with that more on a day-to-day basis or looking at an alternative, like date syrup and just testing it out in real time, getting the feedback from employees on what it was like, then being able to just do taste tests right away, and then run another test batch.
Jessi: That was way faster than going through even their outsource firms you can do for product development as well. And yeah. There’s a week’s lead time for it. You got to get the product back. It’s all packaged up for you. It’s not like you can just go out on the line and taste right there. Or if you’re like, oh great I want to tweak this. They’re like, great. We’ll schedule another run for you. We can just be like, all right, let’s do the next run this way. So we were able to fairly quickly once we had the time to focus on it. It wasn’t a focus for the first couple of years, as we really focus on getting the scaling pieces in place.
Jessi: But once we were like, all right, let’s go vegan. It was really a pretty quick process to just be able to make the changes out in manufacturing. Then of course, you’ve got to make all your changes with your certifying bodies and your packaging and your nutrition packs, all those pieces. But at least from a manufacturing standpoint, you’re able to test, do it really quickly, figure it out, implement everything else. And then when we’re ready to start doing it on the floor was a really easy transition for the employees. Cause they’d been part of the R & D process and they were like, oh cool. This is the new thing we worked on. Awesome. Now we get to make it.
Ken: That’s awesome. Yeah, that’s a great example. I think at LivBar is a good example for people out there who have a brand that’s been able to scale pretty quickly. Oh, I just wanted to double check on that or double click on that. I know that you sell on your website and it sounds like pretty early on the original founders were selling on Amazon and having some success there.
Ken: Were they already on shelves throughout the country, or what’s been the strategy in order to grow that so that you can actually get into retail.
Jessi: Yeah. So when we started, it was in about 10 local retail stores. So some local natural health food stores, and then really the bulk of the business was on Amazon having some subscribe and save customers.
Jessi: And some people that had found the brand on Amazon and loved it there. So when we came in, it was like, We think that this product it’d be great if it could be accessible to people at the retail level. And so it had been doing well on these couple of local natural food chains. So the strategy was all right, let’s go into the whole foods of the world and the Sprouts, Farmer’s Markets.
Jessi: And of course we started off, we had to start a little smaller than that, of course, but that natural food space where customers are, they’re going to the store looking for something that has clean ingredients they are probably interested in the compostable wrapper, they’re going there to buy their other organic products, getting in that space where they’re already looking and they’re open to new product discovery was where we wanted to start out.
Jessi: And so we started with 5, 10, 15, 20 store chains, and then just worked our way up by getting the sell through numbers and showing the proof of concept to be able to then go to Sprouts or a Whole Foods and say, Hey, here’s the. Here’s how it tastes different. And then also of course, what they care about is how are they getting, how are you going to make money?
Jessi: Here’s the sales velocity, and here’s the kind of margin you’re going to be able to achieve. And this is why it’s going to be interesting to your customers. So that was the strategy. And also we early on established our relationships with KeHE and UNIFI. The largest natural food distributors are some of the largest.
Jessi: So we wanted to make sure that was set up so that by the time you go to Whole Foods or Sprouts, they’re like, great. How are you going to get the product? Or which DCS are you in or all those things. And we wanted to sort those out initially that can be really hard because the distributors are like, KeHE they’re really large.
Jessi: They deal with a lot of products. Come talk to me once you close this big account and then you go to the account and they say, yeah, cool, come to me. Talk to me when you close KeHE. And so you’re just this in between limbo. Somebody’s got to say yes before something happens. And so we had, we worked really hard.
Jessi: We ended up KeHE was our, the first distributor that we opened and that really opened a lot of doors of making that sell case. And also talking to them when you’re not co-packed you do have to overcome a little bit of people. They don’t believe you can fulfill because they are like everybody else’s co-pack like, why are you doing your own manufacturing?
Jessi: Do you know how to do it? Are you going to be able to fulfill and be able to talk about that in a, have the sales team articulate that we’re doing our own manufacturing, and then we can fulfill that was really important in, in getting the distribution channel opened up, getting some products in the DC.
Jessi: So when you close these larger accounts, everything’s there and ready to go as soon as they order.
Ken: Any tips on working with a UNIFI or KeHE for the people that are looking to get in with them and anything that you could share with the audience?
Jessi: Yeah, I would say don’t go after them. You’re ready. It sounds great to have national distribution and it is, it can be a really good thing, but you want to make sure that you are ready for that.
Jessi: It’s a really complex relationship to have a distributor in the middle, especially maybe you have a broker, you’ve got the distributor and then you have the end customer as the retailer, everyone needs their cut along the way. So when your builds are at the stage where you have the margins built in to be able for everyone to take their little piece?
Jessi: Do you understand how KeHE is going to charge you back for things you’re going to invoice them. And then they’re going to take out deductions for either free fills or spoilage allowance, or they’re going to bill you back for an ad that the retailer ran. There’s thousands of those line items. Do you have the bandwidth to go through them and dispute any of them that may be wrong or understand what they are because you don’t want to just have all these costs be eaten up by your business and not really understand what they are. So I think it can be a really great thing, but you want to make sure you’re really clear on, do I have a really good likelihood of getting into this chain that’s going to fulfill from KeHE? I wouldn’t just go after it to say that I have it or to, if a broker said, Hey, if you’re in KeHE we’ll take you on kind of thing.
Jessi: I’d be like, yeah. Yeah, let’s talk about. Let’s get a little further down the path before you open something like that up, because it’s just, it’s a really complex relationship that you really have to stay on top of all the time. You can’t just do it again, it’s like a co-packer relationship. You can’t just set it and forget it and expect KeHE to watch out for your product, because you think that the average grocery store has 40,000 different SKUs just in a grocery store.
Jessi: So you think about these distributors managing products. At the end of the day, they don’t have time or the resources to be worried about LivBar. So you have to be worried about your product. And if you don’t have the bandwidth to do that, it’s easy for your product to get lost, too, for all your profit margin to get eaten up, to sell in at a price that then you realize you can’t support later.
Jessi: So you just gotta make sure that you’re ready for that. And you understand how the process works. And I would say talk to other brands in your category, if you can, generally CPG seems to be a really friendly space where people are open to talking to people, even in the same category, but even a parallel category chairs, talk to them about what are their deductions, what DCs did they open first to get these retailers and make sure you understand the path, because if you go into big and broad, you can definitely like when we started with KeHE.
Jessi: We got a purchase order by accident for 54 pallets that would have just, this was when we were still in a 700 square foot kitchen, and it was due in a couple of weeks and I’m like, yeah. So we could kill ourselves trying to do that, but that’s wrong. I’ve done the math, like this doesn’t, this PO doesn’t make sense with this retailer.
Jessi: And when I tried to distribute it back, they’re like, that’s what the PO says. And it’s 54 pallets and I’m like, and then I’m reading the contract. I’m like this isn’t so. We have to eat all the cost and buy it all back. And so I, it was, you have to be, so I worked really hard to push back and I was like, we, I sure I would love the revenue pop at 54 pallets, but that is not the right choice for us.
Jessi: I know this is wrong. I know the cost of coming, going to come back to us on the other side. And then eventually someone piped up into the email chain or the phone they’re like, oh yeah. I meant five master cases. Whoa, those are just so vastly different. And we could have hired a bunch of people to fulfill that and we could’ve spent a ton of money sourcing ingredients.
Jessi: So you have to watch out for yourself on those kinds of things. And you can’t just trust that the other people have your business’s interests at heart.
Ken: Right or that they’re always going to do everything. Exactly what people mess up all the time and you need to watch out for them. Yeah. So I think those are some really good actual realistic, like real examples.
Ken: And that’s what I always love. I want to switch gears just a little bit, as we wrap up here, it looks like you guys, you raised some money in 2019. Is that right? In October of 2019? Yeah. Okay. Have you guys been raised since then?
Jessi: Yeah. Yeah, we’ve done a couple of rounds of funding. We did an initial seed round, and then we raised a convertible note for those that are, if you’re not familiar with the different angel investing terms, this essentially just a, it’s just a different type of way to raise money.
Jessi: And then the next time you raise it converts at a certain rate for your existing investors, but yeah, so we’ve raised a few rounds of funding and I think we have on the horizon to raise some more because it’s an expensive business to be in. And we’ve also, our investors have been really supportive of us doing our own manufacturing.
Jessi: And so they’ve been excited to see that piece grow, but yeah, it’s another part of managing the product of, and having the cash flows with working with KeHE or UNIFI, like there’s a long lead time until they pay you. And then if they pay you, you may need to dispute something. So you can be looking at three to six months to get your money back.
Jessi: So having the cash in the middle to continue to operate your business, or if you get a big PO, do you have enough cash to buy the ingredients to do the run, or are you going to have to wait until you get your next check-in to do your next run? That’s we’ve won, we’ve raised money to help alleviate some of those challenges.
Jessi: So we can focus on growth, focus on continuing to fulfill orders and not having to focus on the, I’m trying to short the cash to cash cycle essentially so that we can survive the long lead time that there is in the CPG world.
Ken: Yeah. And you’ve touched on some of the things that I was going to bring up. I wanted to know what your experience had been working with VCs and their general attitude towards CPG brands like yours from our vantage point VCs. I’ve actually taken a huge interest in CPG brands because of how quickly these companies can scale and how well they can do.
Ken: What’s been your experience or what kind of takeaways have you seen from working with these VCs?
Jessi: Yeah, and it’s definitely interesting industry to industry. So I have some, I worked for a couple of years in the angel investing industry and represented a small fund. And when you’re looking at tech companies versus CPG versus Biomed, they’re all super different.
Jessi: And so in general, I’ve found if you’re talking to someone that’s using investing in software generally. They’re probably not quite the right person to talk about CPG because they’re used to different revenue multipliers or different things. It’s not everyone, but it’s definitely helpful to find someone that understands CPG or has a background or their fund has other CPG companies in its portfolio.
Jessi: I think that’s been the key part is to make sure you’re talking to a VC that understands the CPG language in the world and the challenges, because it’s also sure you’re trying to get money to fund your business, but you also, when you bring in money, you have the opportunity to partner with the investor you’re bringing on.
Jessi: So if they don’t have any experience in manufacturing or any contacts in the industry, You’re missing out a little bit on what could be there. So it can be important to find someone that can be a good partner for you. They’re going to, their personality is going to be a good fit for the team. They know people that are going to be able to help you.
Jessi: Do you have a packaging challenge? Do they know someone in packaging that they’re going to be able to help with or has one of their other portfolio companies gone through a similar challenge. And can they then help you with that? I think those pieces sometimes get overlooked because it’s like we need money to grow, but you’re also bringing on a partner.
Jessi: So don’t miss that opportunity. And also don’t, if someone just does, like I said, Biomed, if they’re Biomedical, don’t waste your time going to talk to them and don’t waste their time. Assured they have money. They’re investing. They’re trying to make a return. You’re just not going to be talking the same language and they’re just going to be looking at the world in such a different way.
Jessi: So I think those pieces are really important to make sure you’re on the same page and looking at the right watering holes for help.
Ken: And those are great tips. So let’s start wrapping up here. So going forward to the end of this year and into next year, what are you looking forward to? What are you, what are some of the projects you guys are working on?
Jessi: Yeah. So we’re really looking to continue to increase our capacity at our facility. So we’ve got a couple of pieces of equipment that we purchased that are coming in that we’re super excited about. Especially the nerd side of me is super excited to get out on the floor and see the machinery.
Jessi: And Martine gets excited about seeing, it’s always fun to see how we can do things faster. So we’re really excited to, for some expanded capabilities in our plants. We have some exciting things on the horizon, which they’re not formally closed yet, but we’ve got some exciting, larger retailer partnerships in the works and trying to get LivBars out in more people’s hands.
Jessi: We started working with a new PR firm that we’re super happy with. So we’re excited to just get LivBars in the hands of more people in the next year and starting to really see the excitement. We started demoing again in June of this year. And we’re doing about 200 demos a month across the country, and we’re going to continue that.
Jessi: And I’m really excited to continue to see that unfold because during the pandemic, we really missed those in-person demo interactions of talking to the customers and seeing them getting them excited. And so it’s been so cool to get to connect with them again and have our demo reps back out in the world.
Jessi: And so I’m excited to continue to see that, to get, to see our customers in person again, and talk to them about LivBar and see if there’s other things we can do for them, or learn about them and just make sure that we’re meeting their needs in all the right way. And if there’s ways we can adjust on the marketing or the product side, being able to do that.
Jessi: But yeah, I’m excited to see what the next year or so brings as we get to interact with more customers and just continue to increase our operational excellence.
Ken: Okay. Awesome. So the quickfire round up at four questions for you. Are you ready for them?
Ken: All right. What’s one tool or resource that you feel has helped you a lot in your current position?
Jessi: Oh gosh. I’m failing the quick fire round. Yeah. There’s so many, like I said, I’m like a tool person. It’s not really a tool. So I guess there’d probably be two things. One is just I never. I never think about how it’s so valuable to talk to someone else in the same position. I’m never underestimating the value that can come from connecting with a new person.
Jessi: I think it’s easy to get so head down and be like, all right, I gotta do my job. Like I gotta solve this problem. But realizing that there are other people out there going through the same challenges and that you can go talk to them and share about your challenges, or maybe they’re not even in their industry, but just connecting with someone new and seeing they’re like, oh, Hey, talk to talk.
Jessi: And then you end up with something that really helps your business. So I think just getting out and talking to other people in the industry has been super helpful, especially not coming from the industry. And then tool-wise, I think I like to keep everything organized, like color coded, very alphabetical as organized as possible.
Jessi: And I’m always on the lookout for new tools and in ways that keep my team organized and to help my team stay organized and just staying on the cutting edge of project management tools or whatever. Like I said, like a tool like Trello, like we use Trello a ton in organizing everyone, keeping track of what everyone’s doing, and that has been super helpful from a visibility and its transparency perspective. So those are, I guess those are a couple of things.
Ken: Cool. What’s one book that you could recommend to the audience?
Jessi: It’s not really a, it’s not really like an operations book, but I think that it’s super helpful to read, The Ultimate Sales Machine is one of my favorite books, because it just talks about the way that people think and the way that people think about purchasing that’s super helpful.
Jessi: And I think from an ops perspective, it can be helpful to look at The Marketing and Sales Lens and then the other one would be either Good to Great or Great by Choice by Jim Collins. Both of those of him looking at him, even in great by choice, he goes into the factor of what is luck and trying to quantify luck and looking at Microsoft and all these different things.
Jessi: And it’s super fascinating and the different it’s that both of those were really eye-opening to me and have helped me make decisions, and given me some different tools in my toolbox to think about the world.
Ken: What is one piece of advice that you would give to your 21 year old self?
Jessi: And this is business advice that I give as well, but a plan for thinking about what if the best happens or think about what if everything works out or what if all the good things happen?
Jessi: As an operations person, I spend a lot of time disaster planning and thinking through all the worst things. And just as a person, that’s what I’m like, all right, I want to be prepared for anything. And I want to make sure if all these things go wrong, that I’m prepared and that’s a super helpful lens to look at the world.
Jessi: But I think early on, it would have been also helpful for me to think of what makes all these good things happen. Then what happens from a business standpoint? What if all these good things happen, then what happens to our business? And it can be a helpful way to look at the world and just a more positive spin on things.
Ken: Yeah, that’s good advice. And then last, is there somebody in let’s just limit it to food, beverage, CPG and that space. Is there somebody that you look up to or a brand that you look up to that you would love to take for lunch?
Jessi: I think probably the founders of Siete. I love Siete. I’ve loved listening to their interview on How I Built This, and their branding is amazing. I love their products and I just think they’ve done such a good job jumping into the crowded category of like chips. Oh my goodness. You talk about jumping into a crowded space where a Frito-Lay has got 80% of the market share and they’ve been able to create their own niche. And I just think that they’re listening to their interviews. I’m like, I feel like it’d be super fun to talk to them. So yeah, I’d have to say, Siete.
Ken: Okay. Cool. I usually watch or listen to all the How I Built This episodes, but I think I missed this one. So I’m going to fire it up once we’re done. Check it out. Okay, Jessi, this has been great. I was excited to bring you on.
Ken: We take it down to like ground level, this stuff that’s actually going on in your company and your facility manufacturing wise. And so I just think it’s just really great lessons. Do you have any sort of parting advice to other entrepreneurs out there that are in the food and beverage market and CPG brands, any parting words as we close here.
Jessi: You don’t have to be an island. And that CPG is a lot more collaborative space than maybe you think it would be. It’s super competitive because of the shelf space on the grocery sport, store, shirt. But I’ve just really found that people in this space are hungry to talk to other people they’re hungry to collaborate.
Jessi: And they really appreciate connecting with other people and adding some time in your calendar to connect with people in, like I set up a parallel or your same category, or even something different with your food product. Go talk to someone in beauty or go talk to someone selling blankets or just talk to someone that’s doing something different and see how they view the world, see what their challenges are.
Jessi: And just remember that you’re not on an island doing this on your own. There are tons of brands trying to make their food products work and get it out. And I think that if we can work together, we can go a lot further than if you try and just isolate yourself and do it all alone. There’s definitely so much to be gleaned from other people and just partnership opportunities that you could never dream of happening until you start having those conversations.
Ken: That’s great. Nothing to add to that. And I appreciate you taking the time today, Jessi. This has been great and I know we’ll talk soon.
Jessi: Sounds great. Thanks Ken. It was great to talk with you and I appreciate you having me on.
Ken: Alright, bye bye!
Ken: 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 all visibility into their inventory and operations. 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.