Justin Gold, Foundr of Justin’s
The long road to success with Justin Gold
Some people thought entrepreneur Justin Gold was nuts for trying to disrupt the peanut butter market. A decade later, , he’s been recognized by Inc and Ernst & Young as one of the food and beverage sector’s rising stars.
Originally from Pennsylvania, Gold is one of Boulder, Colorado’s startup community’s big success stories, having moved to the mountain town after becoming disillusioned with his original career plan: law. The keen outdoorsman made the most of the biking and skiing lifestyle while waiting tables to support himself, and found himself frequently chowing down on peanut and almond butter for the protein benefits.
Gold decided to start making his own at home, experimenting by adding everything from maple syrup and berries to his concoctions. They proved a big hit – with his roommates, who ate everything he whipped up – and that’s when Gold started labeling his jars with his name – Justin’s.
“At that point it changed from a kitchen experiment to a project,” he says. Being completely new to business, he had a million questions about how to start a company, from company structure through to labelling, packaging and food regulations. Leaning on the Colorado University business library as a resource, Gold came up with a business plan. And since Boulder is home to a number of other companies in the natural foods space, from Celestial Seasonings to Rudi’s Organic Bakery, he started reaching out to their founders for advice.
Having raised about $30,000 from friends and family, Justin’s launched in 2004, selling to local stores, but a few years in, wasn’t growing as Gold had hoped. He knew overnight success was unlikely – his own mentor Steve Demos, the creator of milk alternative Silk, struggled for nearly 30 years selling tofu first. Being a “little naive and a little stubborn” kept him going, he says, with the idea that they would figure it out eventually.
“We were failing but in my mind I was successful because I had made a product [and] I was selling it to food stores. But we weren’t profitable. I just kept thinking to myself ‘if we keep growing we’ll become profitable. We just need more stores … but I didn’t realize how expensive it is. The best way to grow is to give away samples, but you have to pay someone or literally be there giving away product. We didn’t have the right profit margins, we didn’t have the right economies of scale.”
He then came up with the idea for nut butter squeeze packs as an alternative to gel protein packs as an energy food.
“I didn’t invent peanut butter and I didn’t invent the squeeze pack but I was the first person to put the two together and sell it individually in stores, and it transformed the category for a lot of reasons. It became portable protein for someone like me, it became portion for control for someone who loves nut butter but there are too many calories and there’s too much fat, and now they know exactly what they’re getting with the squeeze pack.” And as a bonus, it acted as an introduction to his larger jars – consumers were essentially buying their own trial, then coming back and purchasing the big kahuna.
We’d be remiss not to mention one of Justin’s other big sellers: the organic peanut butter cup, which proved such an instant hit they haven’t turned off the machine since they started.
“I love peanut butter and I love peanut butter cups. I would go shopping at a natural food store but I could not buy an organic dark chocolate peanut cup and it really frustrated me. By nature entrepreneurs are very curious people – why can I not get this? Can it not be done?” Gold says.
“We don’t need more candy. If we’re going to make it, let’s make it the best. Fairtrade chocolate, less sugar, more protein, make it the best experience you can have.”
He acknowledges a lot of luck has to do with timing – 10 years ago consumers weren’t interested in high fat, high protein products, for example. But he encourages other entrepreneurs to persevere – your biggest idea might still be around the corner! “It’s all about building little successes.”
Thinking back to the early days, Gold himself could have given up when numerous squeeze pack companies turned him down. Instead, he borrowed money from his roommates’ parents and bought his own squeeze pack machine, one that made a single pack at a time. And when his products weren’t moving off the shelves, he went into stores to observe customers and how they behaved.
As he watched people walk by the energy bar area, it became clear what was wrong. “It was being ignored because there were so many bars, they didn’t know what it was,” Gold says. “Rather than just giving up, we took the squeeze packs and put them in a small little box. We called them peanut butter packs and almond butter packs … and put them in the peanut butter section next to my jars. As soon as we made that move, it worked overnight.
“The classic entrepreneurial myth is once I put a product on a shelf people are going to notice it and buy it. A lot of people think the hard work is creating the product and getting it on shelves. That’s really the easy part. The reality is when people go shopping they have a list, they’re in a rush and it’s a chore to go shopping. People don’t like to try new things. the only way to overcome that hurdle is by getting people to try it, giving it away. If you have a really high quality product and wholeheartedly believe it tastes better you have to demonstrate that.
“We literally set up a little table in front of the peanut butter section and I’d give out samples … all day long, 7 days a week … You disrupt someone walking through the store, get them to try the product, and most importantly, you get them where they can buy it.”
When you’re the little guy up against Goliath, you need to play to your strengths.
“Stores want a variety of brands. How do you compete with a brand that is enormous? The only thing you can compete on is quality and authenticity,” he says. “The web has transformed companies like mine, who can really communicate the ethos of our brand socially and connect with the consumer on a much deeper level. They’re more likely to become a customer for life if they enjoy the things we do as a company outside of making money … delivering a better experience and just being a better global citizen or community citizen.”
There’s another important element in the formula, too – a human one.
“You have to have a great product, a good brand, packing and all that fun stuff, and good timing in the market. Those 3 things don’t guarantee you success. So now what? The last part of that are people. You have to have the right people. I knew through interviewing other successful founders locally that I needed to hire people smarter than I am, experts in their field.”
Gold raised more money from angel investors to hire people – Justin’s now employs close to 40 staff – to help grow the company in ways he knew he couldn’t accomplish alone. He emphasizes the importance of hiring for character.
“If you hire the right person who is hungry, who is intelligent, who fits in well with your company, they can develop the skills. They’ll find the right seminars, people to mentor them – they’re hungry, they’re going to figure it out.”
It’s also important to offer equity, he says. For startups that can only afford a below market wage, offering a stake in the business can make up for that. “People are going to come and go as the business grows but sometimes to really incentivize and attract really talented and skilled operators, sometimes equity gets them over the edge and brings them to your team.
“Everyone in the company is an owner, everyone has equity because I want people to treat this business as if it were their own. I find people are really motivated to help themselves because it helps everyone else.”
On that note, Gold may have been doing this for a long time but he’s got no plans to stop any time soon – not as long as he’s still innovating, selling and most of all, enjoying the ride.
“If I’m not having fun doing this then I want to do something that is going to be fun – where I feel like we’re doing good, making progress and people are getting along, and we’re setting goals and meeting our goals, and having a very healthy business.”
Justin Gold’s three top tips
Find a mentor, or several mentors. You can have a mentor for everything you need help with, you could have 30 or 40 different mentors. My definition of a mentor is someone who has something that you desire, has achieved something that you desire, and they have to have grey hair. it’s funny but it’s true! The reason they have to have grey hair is it generally means they’re available. A lot of the time people we want to meet with aren’t available, they don’t have time for us.
Just start. So many people get paralyzed with fear because they’re so afraid of failure. If you don’t start somewhere you don’t give yourself a chance to end up anywhere.
Always be curious. Can this be done differently, can this be done better, why isn’t this working, can this work better?
- When, and how to know how much equity of your business you should give you
- Why curiosity can be an amazing trait as an entrepreneur
- Key leadership skills to build a solid team
- A key concept to keep your employees super motivated
- When, and how to know how much equity of your business you should give up
Full Transcript of the Podcast with Justin Gold
Nathan: Hey guys. Welcome to the “Founder Podcast.” My name is Nathan Chan and I’m your host coming to you from Melbourne, Australia. So it’s about 12:00 a.m. here just on the grind, hustling, life of an entrepreneur. And there’s something that I really, really wanted to share with you guys. And that was something that I’ve noticed in my own development, and I think it’s a really important lesson that I’ve learnt recently. And I’ll continue to keep sharing these lessons and these nuggets of gold, not only just from our guests but that I’m finding it while I’m on the journey with you. And it’s all about the speed of implementation.
One thing that I’ve noticed from a lot of these interviews I’m doing, is the most successful entrepreneurs, they implement fast. They ship. A common phrase that Seth Godin always says is around shipping, you know, putting the product out there. You’ve got to ship, you’ve got to ship. And how do you know when the right time is to ship? When you’re proud of that product, is perfect doesn’t exist. And I’m super excited to show you coming soon, we’ve got a really, really amazing interview with Seth Godin in the next month that will go live and I’m really, really excited because it’s one of my favorite interviews because I’m a massive fan. But long story short, it’s all about the speed of implementation. Testing, moving fast and rolling things out quickly. I cannot stress the importance of this enough. Perfect doesn’t exist guys.
So now about today’s guest, his name is Justin Gold, and he is disrupting the peanut butter industry. And he has a very, very interesting story to tell around how he founded his company Justin’s. And he’s got all sorts of innovative ideas, and, you know, he’s one of those people that moves fast, all about speed of implementation, but also he’s an extremely persistent person. And he’s got a lot of core marketing lessons, also some really interesting lessons on equity deals and how to structure your company and how to know when to sell your company and all sorts of interesting stuff like that. And we touched on some stuff that I’ve never touched on before. So I think you’re gonna really really love this one. Very very interesting guy, super nice guy, very very humble. I really enjoyed our conversation.
So before we jump in, if you are enjoying these episodes, please do take the time to leave us a five-star review on iTunes or Stitcher, and make sure you subscribe. If you are enjoying these interviews, you’ll most likely like the magazine. Go to foundrmag.com/itunes or foundrmag.com/android to check out the magazine. Now let’s jump into the show.
Thank you for taking the time to speak with me today, Justin. My first question for you is, how did you get your job?
Justin: Yeah, it’s a dream job right now. After 12 years, it’s finally become a dream job. So I grew up in a small town in Pennsylvania, and I was going to college hoping to be a lawyer. And when I was in college studying law, I interned for a law firm my senior year of college and I really just did not…I didn’t really…I wasn’t passionate about law, and I was disillusioned with what being a lawyer actually was. So I moved to a small mountain town in Boulder, Colorado which has about 100,000 people. And I moved out here for the lifestyle, but also because there’s a university here. And I figured that sooner or later, I’ll go back to school. I had a degree in Environmental Policy, but I didn’t know, you know, how to use that.
So I moved out to Colorado. I start waiting tables, working in restaurants, I’m mountain biking, I’m skiing, I’m running a lot, and I’m vegetarian. And because of my lifestyle, I was eating a lot of peanut butter and almond butter. And peanut butter is a great source of protein, and a lot of people will actually use it as a, you know, a meat substitute or as a protein enhancement. So I’m eating a lot of peanut butter and almond butter, and at that time there weren’t really good almond butter brands out there. And peanut butter was really only available in two flavors. It was smooth or crunchy and I really wanted more. So for fun, you know, I just got a food processor, and started making my own peanut butter at home and almond butter where you get dried roasted peanuts or dry roasted almonds, you put it in a food processor, you literally turn it on and you’re done. You know, it’s really easy to make.
So I’m adding honey and maple syrup and chocolate chips and blueberries and cashews and all kinds of fun stuff. And I’d put them in empty jars. I put them in the cupboard, and my roommates would always steal everything that I was making. So I literally ended up putting my name on the jar, Justin’s. And from that point, my roommates kind of encouraged me, ”These are really good. You should sell these.” You know, and I don’t have a business degree, don’t have any background in anything like that. And so, at that point, it changes from becoming a kitchen experiment to coming a project.
Well, how do you start a company? How do you make peanut butter? How do you sell peanut butter? And it became this larger question and I had all these questions you know and how do you become a company? What type of companies should I be? LLC? C Corp? S Corp? You know, how do you find a UPC? Why do you need one? Who is the FDA? Who is the USDA? Where do you get jars? Where do you get peanuts? Where do you get labels? How do you put a label onto a jar? All these questions started coming up.
And so, what I did is I went to CU’s business library, Colorado University here in Boulder, and I started to lay out all my questions and I wrote a business plan and I used some of their reference books to help me write the business plan. And while I was writing this business plan, I started to research and figure out that there are a lot of really successful natural product companies that are here in the small town of Boulder. There is Celestial Seasonings, Silk soy milk which is WhiteWave, Horizon Organic Dairy, IZZE Soda, Rudi’s Organic bread, all these really influential natural food companies. So I started to meet with a lot of the executives of these companies and I started to understand, you know, what it took to actually build a product, get the product on shelf, get the product in stores, build a team around it.
And so, I wrote my first business plan and I raised about, you know, I don’t know $30,000 from friends and family, debuted at the farmer’s market and started delivering to stores here locally. After about three years of just making peanut butters and almond butters, I was failing. It just wasn’t enough. It wasn’t driving the business enough. So I’m on a mountain bike ride, and I’m eating one of these power gels or an energy shot, and I have the idea of, ”Man, you know what, I really wasn’t craving more sugary gels. I wanted protein and I wanted it in a convenient squeeze pack.” And then I had the idea of taking the nut butters I was already making, and packaging them in these single servings squeeze packs as like an energy food. And that was the big idea. That innovating a category was the big idea and that was the squeeze pack for me.
And it sounds really silly because I didn’t invent peanut butter and I didn’t invent, you know, the squeeze pack, but I was the first person to put the two together and to sell it individually in stores. And when I did that, it transformed the category for a lot of reasons. You know, number one, it became portable protein for someone like me. The second thing it did is it became portion control for someone who loves the nut butter, but there are too many calories, it’s just too much fat, and now they know exactly what they’re getting with the squeeze pack. And then lastly, it became something which I didn’t fully understand which is probably the biggest reason why people buy it. It became a trial size for the larger jars that I sold.
So someone had always heard of almond butter. I had always heard of organic or natural peanut butters, but didn’t want to buy them because, you know, I’ve got a whole jar and that’s quite a commitment because they’re expensive and it takes me a month to get through it. But you know what? I can buy a squeeze pack for less than a dollar, and people were buying this squeeze packs trying it, loving it, coming back and buying jars.
Nathan: It’s like an upsell.
Justin: Exactly. And people were buying their own trial. It was, you know, it was almost evil. And so, all of a sudden, the business created a groundswell around the squeeze pack and we were able to sell it where it’d never been sold before peanut butter where we could sell to camping stores. We could sell to coffee shops and all these other places where I like to say peanut butter has boldly gone where it’s never gone before. And then what happened was as I was, you know, working on the nut butters in the peanut butters, I love peanut butter and I love peanut butter cups. And when I would go shopping in a natural food store, I cannot buy an organic dark chocolate peanut butter cup, and it really frustrated me.
So by nature, entrepreneurs are very curious people. Why? Why can’t I get this? Can it not be done? Is it because you can’t really make them organic? So I started to do some research and asking questions. I started making my own at home and then I found a chocolatier that had, you know, peanut butter cup equipment but they hadn’t used it in 30 years because there’s only one peanut butter cup and everyone else is crazy. You know, there’s no reason for any other peanut butter cup manufacturers. But I wanted something that you couldn’t find in a natural food store.
So I was able to talk to this family who had a piece of equipment they hadn’t used in 30 years. I talked them into how to use this equipment to make an organic peanut butter cup. And that was about five years ago, we made our first organic peanut butter cup and started selling them in stores. And since then we haven’t turned the machine off, and it’s been one of our largest selling items. And, you know, my philosophy is if we’re gonna make a candy item because we don’t need more candy, so if we’re gonna make one let’s make it the best. Let’s use 100% organic ingredients, you know, fair-trade chocolate, less sugar, more protein and let’s make it the best experience that you can have. And it’s done really well. People really love them.
And so, now, you know, we’re looking into coming out all these new snacking lines with, you name it, cookies, pretzels, crackers, all kinds of fun stuff. And so, that was about 12 years ago that I started. We have revenues that are between, you know, $50 and $100 million right now, and we have about, you know, 30…about 35, 40 people who work on the business.
Nathan: I’m curious, how did you get your first 1,000 customers in the early days? What kind of hustle did you have to do?
Justin: Yeah. So it’s really fascinating that the classic entrepreneurial myth is, once I make a product and I put it on shelf, people are gonna notice it and people are gonna want to buy it because it’s different, right? And so, a lot of people think that the hard work is creating the product, making the products and then getting it on shelf. But that’s really the easy part because making it is fun and researching it is fun and it’s creative. And then grocery store buyers are always looking for the next big thing and they don’t know what it is. So they’ll bring something in because they really wanna try it and they’re excited to try something new. But the reality is when someone goes shopping, they have a list and they’re in a rush and it’s a chore to go shopping and they’re gonna buy the things they always buy. Maybe they’ll buy something next to it because it’s on sale. But the reality is people don’t like to try new things. So the only way you can overcome that hurdle is by getting people to try it, giving it away.
And so, if you have a really high quality product and you wholeheartedly believe that it tastes better or performs better than everything else, you’ve got to demonstrate that. And so, what we would do is we literally set up a little table right in front of the peanut butter section, and I would stand there and I’d give out samples. You know, I give out samples of our peanut butter, of our peanut butter cups and I do it all day long, seven days a week, and I goes to…wherever we’re being sold, at the stores we’re being sold out just hand out samples.
And you do two things. Number one, you disrupt someone as they’re walking through the store, and you get them to remember you and to recognize you and then you get them. The second thing you do is you get them to try your product so then they can have experience with it. And then the third thing you do which is the most important is you train them where they can buy it because a lot of times, someone will try a product like let’s say you set up at a marathon or triathlon because a lot of your consumers are athletic. And you set up a big tent and you give out thousands of products, right? Thousands of samples to all of these athletes. The challenge is they don’t know where to find your product in the store because you want them to buy it at the store. So whenever you do a demo at a store, what’s really great is you’re actually getting them to try it, and you’re training them where they can go and buy it again by showing them where it is on a shelf. And that’s the name of the game is getting people to come back and buy your products when you’re not there.
Nathan: And I’m curious, when you said the business was failing in the first three years, what kept you going?
Justin: That’s a great question. I don’t know. You know, I think it has a little bit to do with being naive in not knowing that I was failing and also being a little stubborn and just thinking that, you know, just around the corner we’ll figure it out, we’ll make it. And we were failing but in my mind I was successful because I had, you know, I made a product, I was selling it to grocery food stores. I was really excited. But we weren’t profitable and I just kept thinking to myself, ”If we keep growing, then we’ll become profitable.” We just need more stores. We need more stores. But I didn’t realize how expensive it is because if you think about the best way to grow is to give away samples. You have to pay people or you literally have to be there giving away product. And that’s time consuming which is either time or money and it’s very expensive. And so, you know, that’s how I first started. And then we demonstrated some success locally, but we didn’t have the right profit margins because we didn’t have the right economies of scale yet. So, you know, we weren’t selling enough jars, but I just really felt in my heart that, if I just stayed in it and I kept growing that I would, you know, ”figure it out.”
You know, that leads me to something that’s probably further down the road. But that’s my biggest advice to entrepreneurs who wanna start. And the big takeaway is you just need to start. And so many people get paralyzed with fear because they’re so afraid of failure or they’re afraid of, you know, losing the money they borrowed from their friends or from their family. And a failure can really paralyze people from even starting. And the reality is if you don’t start somewhere, you don’t give yourself a chance to maybe end up anywhere. And a lot of the really successful entrepreneurs that I’ve met all started somewhere, realize that what they had wasn’t working and they pivoted because they used the experience of where they started to end up somewhere else. And that’s where they found their success.
One of my favorite people is a mentor and an advisor and a investor in our company, is a gentleman named Steve Demos. I’ll give you his story very very quickly. And Steve, back in the ’70s was living in India, and he was vegan, and he was eating a lot of bean curd, and he really wanted to bring tofu to the United States because he really felt that there’s gonna be an evolution, and that tofu is gonna be the next white meat. And he was gonna be the guy that was gonna introduce it to Americans.
So in the ’70s, he moved to Boulder Colorado where I live, and starts making tofu, start selling tofu. And for 27 years was struggling selling tofu. Now, some people would say he had a successful tofu company, but it was very small and it wasn’t very profitable. And, you know, he had leveraged his house and his personal life was really challenging. He had to work so hard to make this tofu company work. And then one day, he has the idea after 27 years that he wants to make soy milk which is a byproduct of tofu. And his friends were telling him, ”Steve, you’re crazy. The world doesn’t need more soy milk. Stick to what you know.” And Steve is like, ”You know what? I see an opportunity because the people who want soy milk are the people who are buying milk and they don’t even know soy milk exists because you sell…because people buy soy milk in the grocery section, and I wanna sell soymilk in the refrigerated section right next to milk.” And his friends would tell him, ”Steve, the beauty of soy milk is you don’t need to refrigerate it. It’s aseptic. That’s why it’s gonna fail if you’ve refrigerate soymilk. It’s gonna cost you more.”
And Steve was stubborn because he saw an opportunity and his opportunity was, ”You know what? I’m gonna sell a milk alternative right next to milk. I’m gonna call it something that resembles milk.” And he created a product called silk which is the number one soy milk or I should say milk alternative probably in the world. And it became wildly successful after 27 years. And so, I liked it. That’s the far end of the scale. And so, luckily, it took me, you know, a few years to figure it out, and by me, sticking with it and being persistent, trying to think why isn’t this working, then the squeeze pack came along. And if I’d given up on making peanut butter and almond butter knowing that I was failing, I’d have never gotten to the idea of making a squeeze pack which have never gotten me the idea of making peanut butter cups, which then would have never allowed me to get to my next idea which could be my biggest idea yet, which I haven’t even had yet which is kind of crazy if you think about it.
Nathan: 27 years, I just have to say 27 years is a very long time. Like I’m just turned 28.
Justin: It’s crazy. Yeah it’s maddening. I mean he is…and a lot of these founders, they’re not normal. They’re a little like, you know, they’re a little crazy.
Nathan: Yeah. Yeah look and that’s one thing that I say to people is what’s the difference between the ones that make it and the ones that don’t, is they just want it bad enough.
Justin: Yeah. And a lot of it too and I hate to say it because, you know, we create our own luck right, but a lot of it is timing and timing, you know, kind of has to do with luck. And for my buddy Steve, timing was people were looking for milk alternatives. Timing for me are that people were looking for, you know, high protein high fat products. Ten, 15 years ago, people were looking for the opposite. They wanted low fat products. But now everyone wants the full fat yogurt and the full fat milk. And so, they’re looking for full fat nut butters and I didn’t create that. I just happened to be there, and I really have to give gratitude to being lucky.
Nathan: Yeah, I know, but I’m with you. I think you make your own luck, and if you just keep showing up, you work it out. But I’m curious around some more tactical strategies, like shelf-space isn’t easy. How did you go around, you know, matching up against some big brands that have a lot of shelf-space? You talked about how you’re giving away samples and every day, seven days a week you’d hustle. But there must be more to that, right?
Justin: Yeah, you know, and the reality is…and all I know is what I know and it’s my little niche of an industry. In grocery food stores, you know, number one, their job is to sell products. Number one. They need to make money by selling products. Number two is to provide variety to their consumers. You know, a store doesn’t wanna have a whole shelf of just Jif or Skippy peanut butter because they’re not providing a good service to their customers. So they have to have other brands there as well.
Now how do you compete with a brand that is enormous? The only thing you can compete on is quality and authenticity. Quality, you know, using the best ingredients, and making a product that absolutely tastes better than your competitors. Authenticity, right? Sourcing your ingredients from farmers that have, you know, good farming practices or that are organic, giving back and doing a lot of charitable things that your business does on the side, making sure that your packaging maybe has a sustainability component to it. Making sure that, you know, your products are certified gluten-free or GMO-free or just taking the extra step to let your consumer know that this company is more than just making money. This company is about…this company really cares about the natural world or cares about its consumers or cares about its community. And so, quality and authenticity are really important.
And once a consumer, you know, finds you because maybe you gave them a sample or maybe because your brand sticks out on a shelf and then they try you and buy you, hopefully your product tastes good enough that they’ll buy it again. And then if they like the product enough, they’ll do a little research on you. And that’s why the web has transformed companies like mine who can really communicate the ethos of our brand socially which, you know, before you weren’t able to do, and now we can connect with the consumer on a much deeper level and that consumer may become a customer for life because they really enjoy the things that we do outside of the company, outside of just making money. And, you know, the only ways we can really compete with these big companies are by delivering a high…a better experience, and by just being a better global citizen or a community citizen. And those companies…they’re getting nervous and they’re going out there and, you know, they’re buying companies like mine or they’re trying to out-compete companies like mine and we’re really getting their attention. It’s really exciting.
Nathan: Yeah, no that is really exciting. I’m curious, have you had any failures or really big lessons besides the others that you’ve just described? I’m sure you have a ton more. If you could share some of those more with us that would be great.
Justin: I don’t usually call them failures, I just say they were little ahead of their time because it’s all about timing. You know, one of my favorite ones was…so I have two, right. The first failure that I had was actually the squeeze pack, right? And so, remember when I said that I was out there mountain biking and I was eating an energy pack. And so, I correlated the peanut butter and almond butter squeeze pack to be a protein pack because to me, it was servicing a protein need. So when I first developed the squeeze pack, I put them in these trays and I literally sold it like an energy bar because I wanted someone…instead of reaching for an energy bar, to reach for a squeeze pack.
So the back up and another step. So I come up with the idea of the squeeze pack. Okay, how do I make a squeeze pack? How do you do this? Okay, I have no idea but let’s start asking people. All right, it turns out there are three companies in the U.S. that make squeeze packs for all the other companies. So let’s go and let’s talk to these three companies. Let’s have them make a squeeze pack for me. So I call all three of them up and I’m like, ”Hey, can you guys make me a squeeze pack?” ”Oh yes, of course it’s what we do. We’re the squeeze pack company.” Okay. Okay. ”So I have a peanut butter and I have an almond butter and I have a chocolate here…” ”Oh, stop there stop there. Sorry we can’t make this product for you. Have a nice day. Good luck.” All three of them gave me the same exact answer. Do you know why?
Justin: Because of nut allergies.
Nathan: See I’m one of those. You know, I have never had peanut butter in my life. I’m allergic to all nuts as well. Anaphylactic.
Justin: I’m sorry, you’re missing out.
Nathan: So you’re talking about these peanut butters and how good it is and how good it is for your health and well-being. And, you know, like gaining muscle mass and protein. To me, I don’t know.
Justin: Well, I’m sorry.
Nathan: That’s all right, but please go on. This is interesting.
Justin: Oh man, you’re really a trooper for writing this story. So, you know, so these three companies basically all turned me down. And that was an opportunity to give up. But instead, I decided, ”Okay, I wanna make this work. I’m gonna buy my own squeeze pack machine.” So I borrowed about $40,000 from my roommate’s parents, bought a used squeeze pack machine that made one little squeeze pack at a time and started making my own squeeze packs. And I decided that the squeeze pack for me was an energy bar. So I put them in these trays, and I was delivering locally to stores and I sold in these squeeze packs into the energy bars section.
So in all of the energy bar sections here locally in Colorado, we were selling squeeze packs. After about three or four months of selling my squeeze packs, and here I am, I’m so excited because I, you know, I financed the machine and I bought it. I bring it into Colorado, and it takes me six months to figure out how to get it to work and how to get peanut butter to pump through it. And, you know, make our own squeeze pack and put it in these trays and I’m designing the artwork and I’m registering the UPC and I’m showing it to grocery people, and I’m really excited because it’s gonna be a huge smashing success because we’re so positive because we’re crazy.
And so, I have this squeeze pack, and I put it on shelf and I’m really proud of it because there’s nothing else like it. It’s totally unique. And guess what? Nobody buys it. And after three or four months, the buyers at these stores said, ”Justin, can you please come up and pick up your squeeze packs because they’re not working.” And I was so confident that it would work. Every store I said, ”Tell you what, your first case, I’ll give you for free. And if it doesn’t sell, just call me I’ll come pick it up. You’re not gonna lose any money because your first case is for free.” And they all called me up and said, ”Hey Justin, why don’t you come pick up your cases because they’re not selling.” And I was…not only was I shocked, I was devastated but I was determined.
So I knew in my gut that it was a good idea. Being curious and the entrepreneur has to be curious. Why isn’t this working because I know it’s a good idea? So I would watch people as they walk by the energy bar section, and they would make their selections, and that’s when I realized exactly what I said before people are in a rush. They don’t even notice new things. And someone would walk by my protein peanut butter squeeze packs and they’d be like, ”Okay, I don’t understand, what is a squeeze pack doing where my energy bar should be. And I don’t understand what I would use it for. I’m too confused. I’m gonna buy my Clif Bars and move on.”
And so, it was being ignored because there were so many bars, nobody knew what it was. There was a layer of abstraction around it. So what I had to do was, ”Okay, well how do I remove that question of what it is?” So rather than just giving up, we took the squeeze packs and I put them in a small little box. And I didn’t call them protein packs. I didn’t call them anything. I just called them peanut butter packs and almond butter packs. And I put them in these small boxes that were the same exact size as a jar of peanut butter or a jar of almond butter. And I literally moved it out of the energy bar section, and I put it right in the peanut butter section right next to my jars.
And as soon as we made that move, it worked overnight. Somebody who would be walking by the peanut butter aisle, would be looking for a new peanut butter to try and they’d be like, ”Oh is that interesting.” Just like I said before, ”Oh, look there’s a squeeze pack of peanut butter. Oh, you know what? I’m gonna buy that to try a new brand. And you know what? And I might take it to work and have it on a banana.” Or ”I might take it with me while I’m traveling somewhere because, you know, I like that protein when I snack on the go.” And just by repositioning it in the store, overnight we turn a failure into a success and that makes me really proud.
Another failure that we had, and this one clearly is just ahead of its time is we developed the first peanut butter that was formulated specifically for dogs. I love dogs. I’ve got a dog. And, you know, I train my dogs with peanut butter. And so, I developed this peanut butter that was called Doggy Style peanut butter. No hydrogenated oils, no sugars, no salts, just plain old peanut butter made for dogs. And we sold this on pet stores here locally and we sold to some natural foods stores here locally. But it just didn’t quite catch on. You know, it just wasn’t enough of…that just wasn’t enough of a reason to buy, you know, your dog its own peanut butter. And that one I still think is a good idea just maybe down the road.
Nathan: I see. And I’m curious. You said that three years in, your business wasn’t doing too well. You weren’t profitable. Then you said you came up with the squeeze packs idea. So you went and asked your friends and family for more money to buy the machine and stuff? Is that correct?
Justin: No, you know, for the first round, I did go to friends and family. When I needed more money, that door was closed. They had already lent me all the money they could, and I really hadn’t demonstrated that their investment was a good investment. So they weren’t willing to lend me any more money. So to buy the squeeze pack machine, I went to my roommate’s parents. So I found a different resource and was able to finance the machine through his family.
Nathan: I see because I can imagine what that would feel amongst your friends and family like, you know, often the life of an entrepreneur is quite lonely and they…your friends and family don’t understand you and they doubt you. So that must’ve been really tough, right?
Justin: Yeah. No. It’s funny, you know, imagine, I mean you’re young enough to imagine this. I mean I don’t know what your background is but I went to college for four years, and my parents thought I was gonna be a lawyer. And so, they were proud because, you know, practicing law is a very honest career. And they are very proud that I was going to be a lawyer and then when I said I didn’t want to be a lawyer any more, they were supportive. And I told them I’m gonna move to Colorado and I’m gonna start paying off my student loans and wait tables and they’re like, ”Okay, well Justin’s just…he’s you know, figuring it out. We’ll be patient with him.” And then after a few months, you talk to your parents and you’re like, ”Mom, Dad, I know what I wanna do.” They’re like, ”Oh, honey we’re so happy. What is it?” ”I want to make peanut butter.” You know, it didn’t sit too well with them at first because it’s very scary. And to their credit, and I’m gonna do the same thing for my kids, they were supportive. And getting people behind you, even if maybe they thought I was a little crazy or they never thought it would succeed, they supported it and they raised me to be resilient. And so, I was able to make it work. And like you said, you just have to put in the time and you’ll figure it out.
Nathan: I’m curious around your growth. What strategies do you have? Like you mentioned, you’re trying different things but to get to the level where the companies at now, there must be some more strategies to handle that growth and to further accelerate it because there are a lot of companies that start that don’t attain that level of growth that you’ve had Justin. So, I’m really curious around that if you could give us a little more insight.
Justin: Yeah, you know, the whole growth part is you have to have a great product, right? You have to have a good brand, you know packaging and all that fun stuff. And you have to have good timing in the market, right? Now what? Because those three things don’t guarantee you success. So now what? And, you know, the last part of that are people. You have to have the right people. So I knew through interviewing other successful founders here locally and talking to other companies that I needed to hire people who were smarter than I am, people who are experts in their field.
So I literally…I went out and after I created the squeeze pack, I went out to Angels and I raised a, you know, more money from Angel investors and that money was to go out and attract the right people. And I hired people who are much smarter than I am, who had experience in the industry, who knew how to grow this company in ways that I would never know how. So I brought on really smart talented people. I let them lead and I would give them guard, you know, guardrails because I have a vision and I know where I want the company to go, but I need to let them lead. And so, I found the right people who are highly motivated, who are very intelligent and I’m letting them help grow the business with me.
Nathan: And that’s a great one. That’s like Leadership 101, just giving people a go, you know.
Justin: Yeah. Agreed. Agreed. And so silly because so many people just forget that.
Nathan: Yeah. When it comes to hiring, do you choose character over skills or skills over character?
Justin: Wow. I’ve never had that question. That’s a great one. Let me think about that for a second. You know it’s a…
Nathan: Yeah, it’s something that people talk about a lot. You know, you hire skill over character or character over skill and you said you’ve hired great people and you’ve said it’s really helped your growth and you’ve got, you know, A players. And that’s what people say, hire A players but A players have the skills but they might not fit the company culture or you know, the team doesn’t gel together. So that is something that’s very tricky and I’m curious, you must have that stuff damp patch. So if you can give us a little bit more about an insight into that that would be really interesting.
Justin: You know clearly like the easy way out of that question is I hire people have both. But to be fair, I probably lean more towards people who have character that I admire because if you hire the right person who is hungry, who is intelligent, who, you know, fits in well with your company, they can develop the skills. And by developing the skills, they’ll go out, they’ll find their own people to mentor them, they’ll find the right seminars and places to learn to get the skills because they’re hungry and they’ll figure it out. So I find the right people who are passionate, and I think passion is so important. So I got in and I find really, you know, skilled people who understand our industry, who wanna become…wanna learn more about the industry, who want Justin’s to be a success for them.
And the one thing that we do here is everybody in our company is an owner. Everyone here has equity in the business because I want everybody here to treat this business like their own. And when somebody is motivated at that level, they’ll go out and do things and learn things because they wanna succeed because they know that if the company succeeds, they succeed, everyone wins. And so, I find people who are really motivated to help themselves because it helps everyone else in the end.
Nathan: You know, that’s great. I mean that’s really interesting. When it comes to giving away equity, you said everyone that is an employee of Justin’s, they have equity in the business. What is your recommendations for early stage entrepreneurs? Do you think they should hold on to as much equity as possible at first, or do you think it’s good to give you your first…like your core team equity in the business so they have a sense of ownership because that can be quite tricky, right?
Justin: Oh yeah, of course. So I think it’s important that, you know, you do offer it early. But you don’t have to be generous but you have to be fair. And whenever you offer equity, you want to be strategic with it. You know, the equity you’re offering vests over four years, right? So that way there’s a kind of a golden handcuff there. If that’s over four years and if you’re fired for cause, all the equity comes back to the company. If you leave or if you’re fired or if you’re laid off or something like that, then only the company that vests, you keep the rest of it, comes back to the company.
And even if you do leave for, you know, for good reasons, the stock that’s vested, the company has the option to buy back. So you can always go back and get some of that equity if you need it. But I think and clearly people are gonna come and go, you know, as the business grows. But sometimes to really incentify and to attract really talented and skilled operators, something like equity gets them over the edge and brings them onto your team. And it’s better to start earlier rather than later having really smart people on your team.
Nathan: Yeah this is great. I’m really fascinated by this stuff. I’m curious, do people tend to choose the equity pace more over the salary pace? Which is more attractive?
Justin: You know, generally speaking, it’s been the equity. And our company in our industry, we pay a little under market because we wanna invest the money into growing the business, not paying people’s salaries. So we use the equity as, you know, an incentive for having a lower than market wage. And the equity piece is something that once it vests, has value and you can sell it back to the company, you can sell it to an investor, you know, that’s worth a lot more in the long run than the salary. And then of course, the hopes is as the company grows and develops, we will pay people more market and higher market salaries. But right now everybody understands that, you know, because I’m being paid an under market salary, we’re gonna take that money and put it back into the business and grow the business that much faster which grows this other portion of incentive that I have my equity that much more.
Nathan: Yeah. This conversation is going to another direction. I’d like to keep on it because it’s really exciting to me and really interesting. You talked about a lot of these big companies buying companies like yours. One, and I’m not sure if you’re able to answer this but, you know, have you had any acquisition offers, and if so or if you have not, would you ever sell your company, and what would sway those decisions? And how does an entrepreneur know if a company is knocking on their door? How do you evaluate that decision to sell or not because I’ve been in this position too and it’s very tough.
Nathan: Yeah. So, you know, to answer your first question, nobody has approached us to buy our company and not that I know of. And it’s not my goal or/and ambition to sell the company, but you have to admit once this company is no longer fun, once we get to a point where we’ve grown too big or we can’t innovate new categories or no one’s buying peanut butter anymore or we’re just not getting along and having fun anymore, then guess what? I don’t wanna come to work anymore. I wanna do something that’s fun and inspiring and exciting.
So everyone here, we’ve all made a commitment that we’re gonna work here and have as much fun as we can and do as much good as we can. And if things start getting out of balance and this becomes…this isn’t the same, you know, opportunity that it once was and that’s something that we would consider. But right now we’re having so much fun and we’re doing such cool innovative things, that it’s really not come up. But my philosophy is about fun. And if I’m not having fun doing this, then I want to do something that is going to be fun. And that’s so important to me. And not fun like, you know, “Oh, having such a good time.” But fun where I feel like we’re doing good, and we’re making progress and people are getting along and we’re setting goals and we’re meeting our goals and we’re just, you know, having a very healthy business.
Nathan: It’s exciting.
Justin: Yeah exactly.
Nathan: Oh, look Justin I could talk to you all day. I’m really enjoying this conversation. But we have to work towards wrapping up. Last question, if you could give two action items for, you know, early stage novice entrepreneurs, what would they be? For new entrepreneurs wanting to get ahead. You know, just one little hack or little piece of advice that could really help them in their development with their business and their growth as an entrepreneur. What would those two action items be?
Justin: Yeah, you know, I would say number one is find a mentor or several mentors. And a mentor doesn’t have to be…they’re gonna be…you can have a mentor for everything you need help with. You can have 30 or 40 different mentors. And my definition of a mentor is somebody who has something that you desire or has achieved something that you desire. And they have to have gray hair. It’s funny but it’s true. The reason why they have to have gray hair is because it generally means they’re available, because a lot of times the people we wanna meet with aren’t available. They don’t have time for us.
And so, a mentor is someone who has achieved a level of success or has something that we want, and they have the time to invest in us to show us how…demonstrate how they got it. So I think number one is finding, you know, a good group of mentors. And number two like I said earlier, is just start. I guess number three would be and always be curious. You know, can this be done differently, can this be done better, why isn’t this working, can this work better? So those three things I think are the most important.
Nathan: Awesome. Oh yeah, look, great speaking with you Justin. I’ve had a lot of fun. Thank you again.
Justin: That was fun. Thanks, Nathan.
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