75. Growing An 8-Figure Brain Food Brand w/ Will Nitze

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The Brand Builder Show
75. Growing An 8-Figure Brain Food Brand w/ Will Nitze

Growing a food brand is no walk in the park, let alone growing one to $25m in sales.

But that’s exactly what Will Nitze – this week’s podcast guest – has done with food brand IQBAR in just 5 short years.

In this insightful episode, we talked through the entire journey, including:

  • How he came up with the idea
  • How he funded its growth through crowdfunding and rounds of investment
  • What the research, development, and testing processes looked like
  • How Amazon compares to other channels like DTC
  • And so much more!

Will is a savvy operator and this is an episode not to be missed!

Episode Links

Additional Resources

Talking Points

  • 00:00 – Introduction to Guest: Will Nitze
  • 01:21 – Will’s Entrepreneurial Journey and the Story Behind IQ Bar
  • 07:42 – Exploring Brain Food: What It Is and Its Benefits
  • 10:15 – Avoiding Hard Claims for Supplement Brands
  • 12:36 – Creating IQ Bar’s Unique Recipes
  • 14:45 – Journey with Manufacturers
  • 16:20 – Starting Number of Units: Initial Production Considerations
  • 17:33 – Launching with Kickstarter: Funding the Business
  • 20:05 – Revenue Targets and Channels
  • 22:24 – Dealing with Copycat Players: Navigating Competition
  • 26:30 – Omnichannel Business Model
  • 30:23 – Cash Flow Challenges: Scaling Up and Managing Finances
  • 33:10 – Financing Routes: Options for Funding Growth
  • 34:27 – Beyond Cash Flow: Addressing Other Scaling Challenges
  • 37:10 – Managing Shareholder Pressure
  • 38:20 – Will’s Workweek Insights
  • 39:43 – What’s Next for IQ Bar? Future Plans and Innovations
  • 42:39 – Discover More about Will: Where to Find Additional Information
Ben Donovan  00:00
Hey folks, welcome back to another episode of The Brand Builder Show. And if you’ve ever been interested in starting a food or consumable products brand, then this episode is for you. We’ve got Will on the show today will has grown IQ bar to substantial size and he’s going to be talking us through exactly how he’s done it step by step playbook today. Will, welcome to the show today. 

Will Nitze  00:23
Thanks for having me. 

Ben Donovan  00:25
It’s a pleasure to have you on IQ Bar, is that is that how you say it? I mean, it’s not 

Will Nitze  00:29

Ben Donovan  00:30
Yeah. Okay. I thought that was the case. But I didn’t know if it was like a fancy kind of way of saying, IQ Bar or something. It’s IQ Bar.

Will Nitze  00:38
Yeah. Yeah. It’s funny you say that a couple. A couple of people have said that. Our standard logo is a stacked logo. We’re trying to move more towards a stacked logo. So it’s IQ and underneath bar. But yeah, it’s all consecutive. It’s kind of like RX bar. Right? Maybe like is that RX bar? You know? But not the first time we’ve gotten that?

Ben Donovan  01:03
No, I think 99% of the time, it would be relatively obvious, especially when you sort of see the story of the brand. I had a little bit of a look at the website, which looks amazing. I love that, which we’ll talk a bit about. And I think it’s yeah, when you see the story and the heart behind the brand, it’s even more obvious. So give us a bit of a background before we talk about the journey of IQ bar, you know, your journey, how you got started in entrepreneurship, where you got, maybe not where you got the idea from? Because we’ll get to that. But yeah, what what kind of birth this, this journey in you?

Will Nitze  01:39
Yeah, I mean, I always wanted to do something entrepreneurial. Not always. But I would say starting in high school, a startup started getting cool, quote, unquote, and I got interested in startup culture, and just the idea of starting a business and I come came of age, during a time when tools, you know, the barrier to entry to start a company was much lower, and tools were coming out all the time that made it easier to start businesses. So just kind of had that entrepreneureal bug. I, you know, I didn’t know what I wanted to do in college. And I took a number of courses that I hated. But a few that I really love were in the realm of psychology and neuroscience. So basically anything brain related – how the brain works, how it fails, how to make it work better. And I wanted to, I was also interested in business. And so I wanted to work in the intersection of psychology and or neuroscience and business, but there’s no real obvious profession sitting at that intersection. So basically, I didn’t know what I wanted to do. I took a job in software, sales and marketing right out of college, just sort of by default, just to have a job and, you know, learn how to how a company works and earn a wage and all that and, and I got really good at a number of things, Excel, PowerPoint, running meetings, pitching room, etc. But I really didn’t like it. I wasn’t passionate about software. I was selling predominantly in oil and gas companies in Texas, and I wasn’t all that passionate about oil and gas. So it helps to have some, you know, the other side of the coin relative to, you know, being your own boss and entrepreneurship. And knowing that it can kind of suck and having that reference point. And that’s why I always say for, for people, like go get a job out of college, don’t try and start something, understand how a company works, understand what it’s like to have a nine to five and go into an office and sit at a desk and have team meetings and all that, understand that before you take the plunge, because you want to have that, that reference point. But um, but yeah, I wasn’t all that passionate about it. And then concurrent to me having that job, I got really a new nutrition for personal reasons. I had a terrible diet. And I felt bad, you know, on a daily basis, cognitively. Now I get headaches and mental lethargy and fatigue and that 2:33pm feeling was a daily occurrence for me and I just kind of felt like crap. And so I got really into nutrition as it related to the brain and brain function. And that took me down this hole. Of course I had that that interest in the brain college but that took me down this hole, new rabbit hole of well, where does nutrition intersect with cognition? And read voraciously on the topic and anyway, all of those forces came together to me thinking maybe I’ll start a brain food company. Yeah. And so I did.

Ben Donovan  05:02
Yeah. And that kind of answers the first question, which was going to be where did you come up with the idea, but it’s one thing to come up with the idea, it’s another thing to make it happen, because you are, what we’re talking about here is plain to see is not just some, you know, private label some company that’s offering a certain type of food, and you’ve just put a logo on it and shipped it out. You’ve put a lot of time and energy into making something that achieve certain goals. What did that look like? Obviously, sounds like there’s a lot of research has gone into it for starters.

Will Nitze  05:35
Yeah, a lot of research. I mean, I was never interested in doing something unless I was taking an entirely new novel spin on it. I wanted to play in a big category, and not ever get caught trying to manufacture demand, but instead, service existing demand, but do so in a new, new way. And so, you know, the idea was, “okay, I’m gonna make a ready to eat brain food, because that doesn’t really exist. But let’s look at what’s on the market and what’s working as a starting point.” So bars was a natural one, because it’s a huge market. You know, I think it’s like a four and a half billion dollar market growing. It’s not going away. There’s massive existing demand. So cool, what what’s working in that market? And how do I mimic, you know, 85% of that, and then take a 15% unique spin on it, which is that brain element? And so yeah, I mean, it was, oh, by the way, I had no background in consumer goods, let alone food science or nutrition. So all of that was self taught. But um, yeah, I mean, at nights and on weekends, I, literally in my kitchen, just mix and mash stuff up together for a full year, until I was able to cobble together some decent prototypes, link up with a manufacturer who said they would make her stuff. But it was all trial and error, and a lot of research. A lot of research, it’s kinda like a math problem, like creating a food or beverage products, kind of like a math problem. It’s just like, “Okay, if you want X amount of this, and Y amount of that, and z amount of that, and it needs to cost a”, you know, and then also, as it tastes good, and be a good product, and look a certain way and smell a certain way and last 12 months on a shelf. What’s the equation that makes that happen? You know, and it’s, it’s tough, really tough. But, yeah, just kind of trial and error over the course of a year.

Ben Donovan  07:42
What is it? What is brain food?

Will Nitze  07:46
Yeah, so I mean, we, you can live, there’s a spectrum of just like food, it’s like sustenance, and then medicine. And so you can, and like medicine, you could call like, nutraceuticals, say for consumable products. And you have to decide where you want to live on that spectrum. And I kind of, I always want to live on the food side. So we’re not we don’t make hard claims or anything like that. But basically, what we’re trying to do is center on whole food ingredients that are rich, in compounds that have been shown to be good for your brain. So like, take vitamin E, for example. It’s good for your brain for a variety of reasons. What’s in nature is the highest or one of the highest and vitamin D almonds. Okay, so you’re gonna like have almonds be our number one ingredient. It’s not that we’re pumping vitamin D into the bar and two, it’s sort of being the most brain healthy thing on the shelf, but it’s not a nutraceutical or medicine or anything like that. Another example would be flavonoids, which is a poly phenol, which is a compound that’s really good for your brain for other reasons. What’s highest and flavonoids. You know, in the berry family, it’s blueberries. Okay, cool. We’re gonna have a blueberry bar. In the leaf family. It’s Matcha. Okay, we’re gonna have a matcha bar in the bean family. It’s cocoa beans, cool chocolate. Etc, etc. So yeah, it’s just centering those formulations on whole food ingredients highest in XYZ brain nutrients. 

Ben Donovan  09:22

Will Nitze  09:24
But that’s there’s trial and error there too. They’re like I wanted to include resveratrol, which is compound and grapes. Sometimes people say red wine is good for your heart and circulatory system and brain and things like that. And reality is, it has this stuff called the why they say that is because of this stuff called resveratrol. That you would have to drink a zillion bottles of wine for that be true so that you can actually concentrate that and consume it. It’s a great supplement. But, and I tried to formulate it into the bar but the bar is going to cost 10 bucks. Is it going to work in retail? No. Do enough people care? No. You know, so you have to make these micro compromises along the way to align with realities of the marketplace and what consumers care about and things like that.

Ben Donovan  10:15
Yeah. You mentioned about hard claims not making any hard claims, is that a fine line to balance? Because we would have listeners that maybe have supplement brands, and there’s obviously all kinds of, you know, restrictions around what you can and can’t say, and marketing. Does that kind of define your product development process?

Will Nitze  10:36
Yeah, totally. I mean, first of all, you have to decide, are you a supplement like, take like hydration stick pack packets, you could either decide. There are certain things that are on the fence where you could decide to go in the supplement land or try and stay in food and beverage land. That’s key, right? Because it impacts a lot and impacts your branding, how you frame it, what categories you sell in and on Amazon, like, a lot of downstream implications of that decision. And then once you make that decision, even within that, it’s like, “Okay, do I want to make claims? What claims don’t make?” You know, obviously, claims are much more heavy in supplements, but there’s claims in food to, right? 12 grams plant protein, that’s a claim. So, yeah, you have to be very, very thoughtful about that. I’m very careful about it, I would say, a common mistake is people like overclaim. You don’t need to over claim in most cases, and it’s sort of an unforced error in most cases, like just don’t. People get it. People can get it without being beaten over the head with it. So to speak, like that, like blueberries, right? You don’t, you could make certain claims about anthocyanins and all these, like poly phenolic chemicals in blueberries that are really good for your brain. Or you could just make a much lighter claim of like brain healthy. And so you’re better off just making the lighter claim because like, A the consumer doesn’t care most don’t and B, you’re just gonna get yourself in less hot water and C it’s either just as effective or more effective, because you don’t want to intimidate the consumer or be unapproachable, and heavy claims are in many cases unapproachable.

Ben Donovan  12:36
Bringing it back to the manufacturing, because I think that’s a journey that a lot of listeners will be very much interested in. You talked about lots of formulations, lots and lots of testing for a year. So it wasn’t as simple as being able to just go to a manufacturer of these kind of bars and say, get them to give you input like you had to put a lot of the research into this. Well, where did you get the confidence from to be able to then give them the final formulation? Was there like expertise from them? Did they give you input? What was that relationship? Like?

Will Nitze  13:08
Yeah, it’s, it’s a give and take. I mean, as you get bigger and bigger, you can really like kind of say, hey, we want this, like make it happen, getting the machinery required to make this happen, yada, yada. When you start out, it’s more so the inverse of that, like, hey, this, them telling you, Hey, your product needs to be x, you know, have XYZ attributes to run on our line. And if it doesn’t, we’re not going to run it on our line. So you know, you do have to kind of morph your product into something that will run on their line. And that’s just the back and forth, right? Maybe it means that you have just random example, like let’s say you have, I don’t know 20 grams of almonds in your products and, and 15 of those grams is almond meal, and five of them is almond butter. Well, they might say, hey, we actually need it to be 17 grams of almond meal and three grams of almond butter. Because the way we produce this is going to make too much oil, see about the oil is going to accumulate on the line. It’s gonna cause slip blurriness and all these problems. And it’s like, okay, yeah, fair enough. We’ll make that tweak. And so it’s a back and forth. Across meant that’s a simplistic example. But there’s like 500 of those examples. And that’s a critical, critical critical relationship to foster and nail is you and your manufacturer because if you don’t, if you don’t have the ability to manufacture while you’re not going to have good products and you’re not going to succeed.

Ben Donovan  14:45
What’s your journey with manufacturers been lucky? Are you using the same one you started with or if you moved around?

Will Nitze  14:51
Now we’ve moved around I mean in the way this is certainly true for bars a believe it’s mostly true for most categories, but As you level up your volume, you know how much you’re making per run. And then also just aggregate how much you’re making on an annual basis. Different manufacturers are better at different volume tiers. So you’re going to start with like a starter co packer, which is, you know, maybe you’re making 20,000 units. Sounds like a lot, but actually isn’t, you know, from a manufacturing standpoint, and then once you generate enough business and businesses business and you’re bursting at the seams, okay, now you move someone who’s really their core competency is like 100,000 units, a rock, so on and so forth, until you get to a co packer who can kind of go to infinity, it’s like, we could run 200,000, and we can run 5 million. And that’s where we’re at now. So we could feasibly scale to infinity. It is a pain, no, no question about it moving from one to the other. It’s a super painful process, because you have to redo all that stuff I was talking about earlier, you have to make sure it runs in their equipment, and their processes are good. And quality control is good. And it’s centrally located, you know, the geography kind of matters.

Ben Donovan  16:20
Yeah, what did you start with? How many?

Will Nitze  16:24
I think our first run was 30,000 units, but we did so we did a Kickstarter to start. So because we there’s no other way we needed to generate a lot of demand without having a product, which is kind of crazy. But that you can do that through crowdfunding, if the crowdfunding campaign goes well. Yeah. And so we did that. And we generated I think, something like 2000 orders out of that. And then that, bit off a big chunk of that 30,000 units. And then the rest was like repeat orders. And we started running ads, and we were moving at that point. And then it was like, Alright, can we generate enough like, have a customer base to where the next time you run? 30,000? That’s not too much. You know, we can we can sell through that? Because you’re also dealing with a perishable products. So every every bar you make off the line is a ticking time bomb. Got to sell products was expires.

Ben Donovan  17:23
Yeah, definitely. What the when you launch, then we’ll definitely talk about customer acquisition, because that’s something that I think is very interesting from that standpoint. But when you launch then with the Kickstarter, did you find yourselves really well? How did you fund it beyond that? Like, do you just manage to be able to make enough sales beyond that to keep funding it? Or have you taken on extra funding as you’ve grown?

Will Nitze  17:49
Yeah, we know, we took on funding fairly early, but our whole model was raised less money more often. So I mean, to date, we’ve now raised 10 million, $10 million, roughly. But like, six of that was December of 2022. So like six months ago. So yeah, I mean, we did the Kickstarter. And that was kind of a proof of concept. And then on the back end, under that we raised, I think, 625 grand or something like that. But I mean, my belief is you just this is, for better or worse, it’s a capital intensive business, and you need money, and you’re not going to get credit on from a bank, because you’re not a credit worthy company. So you’re gonna need cash, to finance, you know, you’re also not running 80% margin business, you’re running at first, like 25, 30%. Hopefully, you get to 50 plus. But your margins are never going to be worse than they are at the very beginning. You’re never going to make more mistakes than you are at the very beginning. So you need cash. Like it’s just, there’s no two ways about it. But our whole thought was raised the smallest amount possible to like hire a small team and be able to make production runs and invest in ads and all that which we did, and then kind of got a bunch more proof points and then raise another slug of cash a year later was a million bucks in 2020. And 20, or excuse me in 2019. And then, a couple years later is 2.75. And then a couple of years later is 5.75. And so it’s all in tranches. Some some folks will raise like six or 7 million, but that’s massively diluted because they raised it all in that one chunk too early, in my opinion too early. 

Ben Donovan  19:53
So you what does that make you about 2018 when you started?

Will Nitze  19:59
Yeah. Kickstarter was Jan 2018. And we fulfilled our first order from that mid 2018.

Ben Donovan  20:05
And then to give listeners as context, what kind of position you’re in now, as much as you’re able to share, but whether it’s revenue or ballsy selling that kind of thing.

Will Nitze  20:15
Oh, this year, our goal is 25 to 30 million in sales.

Ben Donovan  20:20
Is the majority of that DTC. I know you’ve got some other channels as well.

Will Nitze  20:25
No minority is DTC, I think maybe 13-ish percent would be DTC.

Ben Donovan  20:36
Okay. Your website’s really good.

Will Nitze  20:38
Oh thank you. Amazon is roughly 4x of what our website is, and then brick and mortar is a massive chunk of the business.

Ben Donovan  20:48
Really, what is what’s driving the most sales for you on Amazon? Is it branded stuff? Or is there what kind of keywords are driving up for you?

Will Nitze  20:57
If my wife would be a better person to answer that she runs her whole eCommerce business? And really Amazon being like the center of that, but yeah branded for sure. Keywords? For sure. Diet related, for instance, keto, where our broad bars or keto vegan plant protein, things like that.

Ben Donovan  21:23
Yeah, no, it’s interesting, because I just would have thought that DTC would be a bigger percentage of it just because of the nature of the products, but just shows the power of Amazon. 

Will Nitze  21:34
I mean, there’s just certain categories that are big on Amazon, like, I mean, I just think about how many like brand websites do you go to to buy stuff? For me, not many like usually I go to Amazon, because you can bundle five different things together and take care of all your little ticky tacky shopping. You’ll go to the website for like maybe like big ticket items, for very specific items. And maybe it’s like Nike shoes or something. But for like, things that if we’re just honest, are low price point, semi interchangeable, like never assume you’re so special that you can’t be interchanged with something that you can be in most cases. Amazon is just where people shop.

Ben Donovan  22:24
Have you found yourselves getting copycat players come and try and take some market share?

Will Nitze  22:30
Yes, yes. They’re not very good. It’s very, very hard what we do, man, that’s a, it sucks. But it’s also good because the barrier of entry is low. And the barrier to success is extremely high. And, and the barrier to entry. Such that you’re hitting a compelling price point with a good product is not low, it’s just guess you could start something, it could be kind of similar. But when you look at the unit economics, the product quality and branding, it’s actually very, very, very hard to compete. So sort of, but not really,

Ben Donovan  23:11
You obviously have to display your ingredients, etc, which helps a potential competitor and see what you’re doing from a, you know, an ingredient standpoint? And what then, how do you how do you defend yourself, then as a brand, someone who’s got a, you know, a unique idea? What do you do to defend that?

Will Nitze  23:31
There’s not all that much intellectual property and food and beverage, like, there’s some for sure. There some, a lot of it is, is operational excellence and executing. Definitely, there’s a lot of work that goes into formulating and just an ingredient list, it’s very hard to reverse engineer a bar ingredient list. And then it’s extremely hard to reverse engineer a certain unit economics profile. So you might be able to even let’s say, you could like one to one, reverse engineer something. Reverse Engineering, the supply chain and the unit economics that you’ve negotiated and gotten to like, that’s a whole other thing. Again, it’s like the barrier to entry versus barrier to success thing. It’s, you know, you could try, you could try, but it’s very hard to win playing someone else’s game. And you don’t really know why they did the things that they did. You know, they did the thing, but you’re you don’t know why they did it. And then if they’re kind of always evolving and improving, you’re always like 2, 3, 4 or five steps behind them. Such as, I don’t know, to crappy, crappy business model, in my opinion to try to do that. Yeah, for sure.

Ben Donovan  24:49
Absolutely. Sounds like a big part of your mo it’s just really hard work, which is probably a good mo to have.

Will Nitze  24:57
Hard work. Being unique again you want it you can do you do need that like element of different-ness, capital efficiency, or like obsessing over thing. A lot of these like drop shippers or whatever it’s like, they don’t really think that hard about the product. They don’t obsess about the product. They didn’t make the product so they don’t really know what they’re talking about. And they don’t know what the levers to pull are. They don’t know how to improve gross margin, they don’t know how to reduce input costs. They’re selling widgets. So to really like win long term, I think you have to understand that fundamentally the guts of what you’re making, what all the levers are, where to pull certain levers where to not when to pull them when not, like you don’t know all that inside out. Maybe you could have won in 2020. Not so much in 2023. 

Ben Donovan  26:03
Yeah, definitely lots of what I want to okay, I’m trying not to go off in too many directions here because there’s so much on ask but just briefly on customer acquisition, you talked obviously DTC 13% I think you said Amazon about forex. That leaves a good chunk, which I’m guessing is brick and mortar retail. 

Will Nitze  26:23

Ben Donovan  26:25
Has that always been one of your sort of front running channels? Or is that a more recent thing? 

Will Nitze  26:29
Well, we started with the website and then we layered on Amazon and that was really like the vast majority of our business for a very long time. But then we sort of in tandem kept layering on brick and mortar and it just kept building building building building that up and then there are certain big step changes in that regard with certain big accounts like you land Walmart, that’s a big step change which happens. You know, you get Costco that’s a huge step change and so it’s just chunkier the business than like brick and then ecommerce, which is kind of like our steady and and then you get like, a Costco. You know, it’s it’s just chunkier. Which is good and bad. But I think I mean, I firmly believe omni channel is the only way to go. Like, anyone who’s all DTC is setting themselves up for a massively risky business model and the market is massively punishing that business model and just look at the stocks of Allbirds Warby Parker insert, literally any, you know, the Honest Company, insert any DTC like first brand, and it’s gotten absolutely pummeled by the market. So what’s the antidote to that omni channel like DTC is great I love DTC we have a great DTC business but I also love Amazon I also love brick and mortar and the flywheel effects that feeds all of it is is so key like someone who will see you in a sprouts market in California than Google you then they’ll go to your site and maybe they find your site and vice versa. Maybe the city owner site, learn about you, they read about you and then they see you in sprouts, and then they buy you at Sprouts. So it’s you want to get as many like touchpoints and impressions both in real life impressions and digital as you can.

Ben Donovan  28:28
Do the channels stack up in terms of profitability pretty evenly?

Will Nitze  28:35
No brick and mortars are more profitable.

Ben Donovan  28:38
Really? Because there’s argument in the DTC camp and then the Amazon camp. As in, you’re paying so much in your fees, but then the DTC obviously you have to drive traffic and there’s other expenses. So I think they probably come out relatively even for most businesses. I don’t know. That’d be the same for you. But then what is it? Is it just the fact that they’re buying it straight from you can sell in bulk load POS?

Will Nitze  29:03
Your customer acquisition is zero. So that’s a good, good model, your customer if you spend $0 to acquire customer, you’re probably going to have a higher profit margin. It might not literally be zero because you might have slotting fees or but in most of our accounts, we’ve not paid slotting fees so now you get they get a wholesale person to get a lower price than say someone buying on Amazon pay by a lot. But when you sell it to them, and bacon all the fees you make more profit. Don’t get as much customer data. Retargeting is hard to impossible, etc, etc, etc. But just pure unit economics. I mean, if you look at like most food and beverage brands, how do they ultimately cross the chasm into profitability? Brick and mortar, like they’d layer on a bunch of like, Walmart, Target, Costco, and they just get so much volume there that like a 10% net margin on that account can like fund the entire business.

Ben Donovan  30:23
Yeah. Which brings us on nicely to the last topic that I just want to touch on about scaling up. And, obviously, with brick and mortar, the thing that can help I would imagine is just the fast turnaround of cash, you know, you’ve got the PIO, although I imagine they probably try and negotiate some pretty decent payment terms with you. But you can turn that cash around pretty quickly. What are some of those challenges? Maybe you faced with cash flow? We talked about raising money? You know, the challenges of scaling? What are some of those challenges that you face? Maybe outside of just pure cash flow?

Will Nitze  31:00
Outside of cash flow, or what what are the cash flow related? Challenges?

Ben Donovan  31:04
Yes, sorry. Cash Flow? Yeah, yeah, um, ones we talked about already?

Will Nitze  31:09
Yeah, cash flow is very, very, very important, arguably the most important thing other than having a good product. So I mean, this is why you need cash, like to raise cash in the first place, but you want ideally, you can have certain debt facilities. There’s more and more options out there now today. What with, you know, revenue based financing and things like that, although they come at really high APR percentages. But, yeah, you need cash. And then you want to minimize your cash conversion cycle. Like the time between you manufacturing a thing and paying for all the inputs. And converting that thing into cashback has to be as tight as possible, to being really diligent about terms payment terms, and things like that is important. To your point like Amazon, I think it’s every two weeks, and Shopify is every week or every two weeks, that that is just a quicker payback cycle, whereas brick and mortars like 30 days, sometimes 60 days, sometimes I had a 90 day setup, which is insane. But yeah, I mean, we have gotten into cases where we needed money, and we didn’t, we weren’t gonna get paid back in time to. So having certain financial partners that can smooth out cash flow crunches, is important for me to get out like million and a half dollar PO. That’s gonna cost you 800k to manufacture and fulfill, and you don’t have 800k. Like, you’re gonna have to find some and okay, so it’s a tougher environment, because it’s a higher interest rate environment today. But there’s ways you can do it.

Ben Donovan  33:10
What are the financing routes you’ve taken?

Will Nitze  33:12
We have one partner that’s been really great. It’s called Ampla. That has helped us to smooth out some some cash flow crunches. We got a credit line with our bank that we did use it in a couple of cases. Got an SBA loan, Small Business Association, for I think it was 500k. That was extremely helpful, super low interest rate. So it’s like just pull every thread you can to try and get access to debt. Yeah. I mean, we had investors float us, like we had this one. I remember there’s a right aid PO, it was like an 800k PO. And we couldn’t do it. We didn’t have enough cash to make the product to fulfill the order. And we weren’t going to get it from banks. We called all our current investors and stakeholders. And we’re like, Hey, this is the case like we need a short term loan. And we got one from from one of the guys, so just got to be creative, right?

Ben Donovan  34:27
Definitely. Where there’s a vision, there’s a way to make these funds come about. It’s amazing, isn’t it? Outside of cash flow, and in terms of scaling up, what are some of the challenges there? The thing that comes to mind for me is your product line, how have you decided when to offer more products? I know that’s the thing. The challenge I’ve found in growing is I’ve certainly launched new products too quickly, and then found a real crunch around cashflow there. How are you deciding when to launch your products? What other products that go into What’s that process like?

Will Nitze  35:06
Yeah, it’s a bit of an art. To be totally honest. I mean, we one question is do you go into new categories period, you know, if you’re athletic greens, you have one SKU and you just scale it to infinity. And that’s when technically that’s the best possible business model. I personally, I though, prefer the platform model of small platform. So if we want to be a brain and body nutrition company. I want to play and similar to diversifying your business on a go to market basis of Ecomm, Amazon, you know, DTC, Amazon, brick and mortar, that same principle to me applies to product lines and form factors too. So started in bars, and we’re moving into hydration and are moving into instant coffee that sort of diversifies us in a nice way. And it’s all coherent because it’s all brain and body nutrition. And they’re different, different value props, one is satiety, one is hydration, one is caffeination. So the same consumer can be up sold in across brands. But I think when you’re ready, like you want to my personal belief is you want to build out each product line into a multimillion dollar business stable as a customer base, people like it, you’ve worked out all the kinks, good unit economics, before looking at another incremental one. For me, personally, I don’t have ambition or interest in going beyond three categories. I think that’s the kind of nice three legs of a stool diversified business, that’s not too hectic, like I don’t want to be managing five different contract manufacturers, and you don’t want to lose focus. So it’s a bit of an art and yeah, you got to have the cash to outlay, investing in a new because you’re kind of starting a new mini company, every time you start a new product line.

Ben Donovan  37:10
How are you managing the pressure? You talked about not wanting to take on too much complexity with manufacturers, etc? is there pressure from shareholders or investors to really push growth and, you know, expand quicker? How are you managing that?

Will Nitze  37:30
I guess sort of, I would say I always put more pressure on myself than even they would. I feel I want to move fast. So I even though it’s not comfortable on it’s not a great quality of life and lifestyle and all that I want to push to double every year. I mean, that’s kind of for me, that’s the point of a startup is rapid growth. And it’s also what makes your business more valuable is revenue as well as growth rates. So go raise money at higher valuations and with higher multiples if you’re growing really fast. So I guess there’s pressure, but it’s, I’ve never really noticed it, because it’s always less pressure than I would just put on myself.

Ben Donovan  38:20
What does working week look like? He talked about lifestyle and not being amazing? What was it look like for you?

Will Nitze  38:29
It’s a lot of work. So like, six days, to six to seven days at work all day, every day. I mean, not taking vacations for years on end. Unless you raise a ton of money upfront and build out a big team and all that. But in consumer goods, you’re going to dilute yourself so much by doing that, it’s like don’t even try in the category if that’s the way you’re gonna go, in my opinion, maybe it works for other people, but so you’re gonna have to live on a shoestring budget and be really, really efficient and work. Basically work two to three jobs worth of work for a while until you hit a certain revenue point, gross margin point operational cash flow point to where you can build out a bigger and bigger team delegate. And eventually you can kind of cinch down that insanely hectic lifestyle into just being a moderately hectic lifestyle, but it’s not. I mean, my my lifestyle is still all work all the time, more or less.

Ben Donovan  39:43
What’s the end goal and to finish off, what is what’s next for the brand? You’re going to sell it one day, what was the plans?

Will Nitze  39:51
I mean, the goal is to sell it for sure. You know, I wouldn’t you don’t ever want to put yourself in a position where you You’d have to sell something, you’re forced to sell something and keep growing until someone wants to buy it and then evaluate that and act accordingly.

Will Nitze  40:15
Yeah, but not good, what like not to grant them aggregators will hit me up or whatever it’s, but I’m not I mean, you kind of have to get to like 25, 30 million in sales before you become a sellable business and consumer goods. It’s kind of a weird dynamic. Whereas in software, you might hit 10 million, and you have 30 people knocking on your doors and consumer goods. It’s unless you’re super profitable company. You know, you kind of have to get to 25, 30. And some people would say even more like 50 million before any big companies kind of take note and is interested. So yeah, we’re trying to get there soon. But we’ll see. Again, you can’t have that be the only path. You need to just keep building a great business. And because if you’re building the cell, you’re very likely to get disappointed, especially in 2023. It’s a tough market.

Ben Donovan  41:22
So definitely. Good. Okay. And then my final question, you mentioned about caffeination. Spill the beans, is coffee bad for your brain?

Will Nitze  41:34
Not it’s great for your brain. Caffeine is great. I mean, it makes your brain literally work faster. While the night you drink two cups of coffee today. Feel Great.

Ben Donovan  41:45
Good. So while you are you doing what you talked about instant coffee, just adding flavorings to that? Oh, yeah.

Will Nitze  41:51
Here I have a little thing in here. IQ Joe. So it’s Ribbit pouring hot water. Stir it drink it. Yeah. And then there’s flavors. French Vanilla, cafe Mocha, Hazelnut, and then just Original Black. Yeah, that’s the next one.

Ben Donovan  42:11
Very cool. Good stuff. Well, I’ve taken up most of your time already. So I want to kind of let you go. There’s so many avenues, we could have gone down so many questions that come up. But this has been super inspiring and helpful. Zero to 30 million a year and five years. It’s certainly not normal. And so you’ve executed very well. So yeah, really appreciate you coming on. Where can people find? No, it’s my pleasure. Where can people find out a bit more about you? Do you hang out online anywhere? Are you too busy for that?

Will Nitze  42:44
Oh, no, I’m very active on LinkedIn. Which is, I don’t know. Maybe random, maybe not. But that’s where I spend a lot of my time not so much Twitter. Our websites eatiqbar.com or socials are at eat IQ bar, E-A-T-I-Q-B-A-R. But yeah, if you want to hear my random musings, incoherent as they may be. Find me on LinkedIn.

Ben Donovan  43:12
Yeah, I’m sure there’ll be plenty of people that will certainly want to do that. Amazing. Well, you guys have heard it there. Check out the links to that eat IQ bar.com and find well on LinkedIn. There’ll be loads more good stuff like this that he’ll be dropping. I’m absolutely sure that thanks for joining us in this episode, and we’ll see in the next episode, same time next week.

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