The $500,000,000 meat stick company

What's up you sexy bastards it's your boy Pedro the king of meat sticks aka Pete Maldenado from chomps What is up you sexy bastards it your boy milkshake aka rabbi can't lose aka no cake Today I am chatting with Pete Maldenado now. This is a guy that I've been texting for a few years He was the first person to buy a million dollar weekend and we've since become good friends Pete is also the co-founder of chomps meat sticks You've probably seen him at Trader Joe's whole foods Costco And shockingly this company is on track to do half a billion dollars this year in sales That's amazing and they're only the number three meat brand in America now Pete's story I didn't really know a lot of it and I was amazed and I'm so excited for you to be able to hear about this today He had personal bankruptcy failed multiple businesses and then this meteoric rise to success that I think A lot of you are going to be able to learn and replicate in your own business journeys today He's going to share about how he leverages customer feedback overcoming a lot of challenges maintaining a fun team culture and having a fun time winning now in this episode you're gonna learn three gigantic things number one How do you do one thing and do it really well? You'll be surprised how many actual products chomps meat sticks house number two How do you actually get these partnerships at some of these crazy large places like Trader Joe's? He goes behind the scenes and Pete gives so much details in this episode. It's amazing and number three How do they stay competitive in the meat market? There's gonna be that plus literally Hundreds of your nuggets along the way. I think you're gonna enjoy and love this episode go support chomps It's always amazing once you know the story of someone how much more you want to support them So I've been buying more chomps you can get it at your stores or go to chomps.com Also go give Pete some love tell me heard him on the show and how amazing this episode is after you finish it It's Pete Maldonado that's PET M-A-L-D-O-N-A-D-O That's a mouthful Pete just like a chomps meat stick over on Instagram and Twitter If you enjoyed this episode and you also want to hear more about other success stories Check out one of our recent episodes about the anonymous person who sold his company for half a billion dollars That's episode 357 in this feed people have been loving our emails It's me and this guy named Jay Yang shout out to him who we've been putting in juicy meaty exclusive stuff just for the newsletter subscribers So if you're not on our newsletter, which I think all of you are But if you're not go over to Noah Cagan.com There's hundreds of thousands of people who get it each week that are like damn, that's pretty good pretty good It's not the best but it's pretty good that could be you too so go over to Noah Cagan.com and get the newsletter Also a special pre show shout out to listener Daniel Sanchez 101 Noah's podcast is currently my favorite one to listen to interesting guests content But I really love is getting down into the dirt of how this stuff works I love the vulnerability. I'm hearing his no wrestles with where to go and how to take his game to the next level Damn, man. I appreciate you Daniel and yeah, that's real like I am vulnerable I'm sharing my truth some sharing my struggles and I love seeing you guys succeed as well on your own business journeys If you all want to shout out in a future episode I shout out every single person go to iTunes go to Spotify lever review online It takes 30 seconds. It means the world we check every single one of them All right Pete you're flying you live in a sick house. I came to visit you was amazing. You have an amazing boat But what was the story that people don't know about with chumps in this journey because you came from nothing on it and then to build a half a billion dollar meets to get empire Yeah, I mean, it's kind of a roundabout way of getting here. I went from personal trainer to real estate to this All the things I've done in the past were really kind of a culmination all the fitness nutrition stuff Led me to be interested in like the innovation side of things creating the product trying to solve problems Solve problems for myself and from my clients and then stumbled on this product It was basically just something I loved you know how to meet sticks growing up honestly was as simple as that With real estate. I think that gave me a lot of experience. I took dealing with big deals now We're doing big numbers and a lot of times founders and entrepreneurs can get scared of the big numbers and Maybe they freeze up in real estate I was doing a bunch of commercial deals and biggest one I'd done was about sixty two million dollars. I sold 605 condos and a single transaction All those things that I did today make me cut out for what we're doing We'll get to their origin story, but what's the lowest low of chumps story and then what's been like the highest high? Well, give you a lowest low my story. I found bankruptcy in March of 2009 Chapter seven personal bankruptcy. I've always been kind of a go getter type guy trying to do a million things and I was buying Houses and trying to fix and slip them during the big real estate boom and then between 2006 to 2008 they got caught with all those houses when the real estate market crashed It's like a lot of other people and that was actually starting my first food company Which is called frozen fitness. It was like a frozen meals company like simultaneously of course like try to do a million things and all of it really just caught up with me all at once and There was no getting out from it. That was as low as it gets I think One of the big things I learned during it. I was doing everything wrong because I was doing too much and so I have a buddy of mine. It's pretty successful trader and We're sitting on the front of his boat one day and he's just like why are you doing so much stuff? You're always trying to do a million different things like you get to pick one thing be the best at that and That's how you create real wealth and he taught me about I never really heard that before I thought it was just like the harder I the work and the more crap I do the more money I'll make better chance of being successful It was the exact opposite and so I took that to heart and I just did exactly what he said and here we are So I'm doing this for almost 13 years now. That's a long time for me One of the things that I'm starting to do on my show and the content is how do I highlight people who were doing it for a long time? Yeah, I can see your business I can taste literally taste your business and they stick with it and that's the kind of people I've been miring more and ones I want to be showcasing what were you feeling going through when all these house stuff was like collapsing? What's going on? Yeah, there was no way out obviously, right? I realized man, I got myself into a real wreck at the same time. I realized too. I was listening to a lot of people around me That got me into this place, right? You're supposed to do things a certain way. You're supposed to build the food company a certain way You're supposed to Invest in real estate in this way first off. I'm getting information and advice from people that it's a conflict of interest Right, you got real estate brokers that are telling me that it's a great time and I'm just just too naive back then to even just realize for myself Like that doesn't make sense. I realized now I wasn't investing. It was more speculation and I've learned now anything that I do is got more strategy behind it. It's more of an investment a long-term Outlook on anything that was how I just shifted my focus and I wanted to make sure that whatever I do I'm going to be the best at so we're going to be the best meat stick company. It sounds so Funny and odd and out there before I was like how the hell are you getting to the meat stick business? And it's not like I sat there dreaming about making meat sticks But I did realize this was something that I loved I like eating them and then I realized when they started making the product A lot of other people agree and I'm like this is it. This is what I'm gonna do. I mean the best of this What's been a high in trumps for you? Wow, there's been a bunch the biggest highest ever had it so far was being in we were in Park City, Utah last year with probably 65 or 70 people on the team and Just sitting in the room and looking around at the people and you realize I could look at any single one of them and realizing They're so smart so talented Amazing so much smarter than me how the hell do they work for me like that was like it's just crazy to think about that We've created something that is good enough for that guy or that girl to want to work for us That is insane to me the other cool part of it is All the kids that the teams are having I love that. I don't know why they like gets me so fired up I've got my three kids here. I love kids like and I have one on the way now It's just the best thing realizing like what we've created now is Putting food in the table. It's sending these kids to school. It's getting clothes on their back That's mind-boggling the impact that this meat stick company is having on all these little kids all over the country I love it How did you even source the meat and get the first product out like your first three customers? Yeah, so any meat product has a USDA legend on it only meat products are gonna have it So there's a USA legend it tells you exactly where the product was manufactured So if I'm looking for a co-packer all I had to do is go out and buy every single need stick that I could possibly find Get all the USDA legends. I find every co-packer that makes them and then reach out to it It's a lot more difficult when you're trying to make a bag of chips So whatever it is you kind of figure it out on your own There's probably a database somewhere, but I can't look up like a bag of chips and look at it And be like I know who made this it's tough to figure that out That's what we did. I said Rashid and I did and Then we ended up finding through the co-packer a meat supplier Connected some of the initial dots for us around the Midwest But then we realized we were growing so much faster than this little co-packer could handle and so much faster than the supply chain that we had And then we had an outsource from overseas That's how we ended up sourcing from Tasmania and southern Australia Everything's a Missouri that we initially started with so our initial co-packers in Missouri and then down about two hours from him is another Meat supplier who is importing meat from Australia and Tasmania and he's now our largest importer of beef He became like a huge distributor for us. Coming back on that, what were you doing at the time and what other ideas did you consider? And then how did you choose this one? Yeah. So the company actually started as like an Omaha stakes for grass fed beef. There's going to be like, to for steak and ground beef. And I was cross fitting at the time. I was paleo dieting. And so I was like, oh, this is obvious. I'm just going to go and sell good beef to people kind of like what butcher boxes now, right? So we started that. It was also in 2012. But it sounds very quickly that shipping frozen beef was terrible idea, especially in the summertime. So we ship out product to some of the customers. It sits on their front porch for a day or two. And they're at home and the product spoils. And then who's got to pay for that? Us. That only had to happen two or three times. And we realized we're done doing this. This is not scalable. So very quickly decided like we need to do a shelf stable product. We were actually already making chumps. So chumps, the initial version of chumps were a refrigerated pack. It was eight sticks. It was eight ounces. And it was great. But it was too big of a pack. I couldn't ship it very well. People loved chumps already. So people were buying those. People were giving us all the feedback saying you love these chumps. These are amazing. We decided we're like, man, chumps is the way to go. Like people love these meat sticks. So what we have to figure out though is how to make it shelf stable and how to do single serve and be a better for you version of the typical gas station snacks that people are used to seeing. And then I was eating. That's really the idea. It came from I told you before about frozen food business. I was a great learning experience for me. One of the big things I think I learned from frozen fitness was not having to perfect things before bringing it out to market. It's going to be like iterations and reiterations. Get it out as fast as possible. Get the feedback and then iterate from there. I was so like anal about everything. I was creating a website. It had to be perfect. I wanted every bell in Whistley could possibly have. I spent so much money on that stupid website to the point where I never sold a single meal through the website before we ended up having a fold up. And so I was selling product like over the phone to friends that have heard of me through other friends and like the business is actually doing decent without even having a website. I could set up these glass type ice cream freezers. So I would wrap like our logo and put those in gyms from South Florida and ended up working our way up to Atlanta. So would have been great. I think we were a little early selling frozen meals online. But yeah, not worrying about perfection before bringing something to market is key. How did you make your first sales of jumps? And how does you even package it? How did you even get the wrappers for these sticks? All the co-packers already making them. So he was already doing sticks like this. So we asked him like who are the suppliers and all that. We actually worked at the deal with him is he's providing the film like the bottom film. There's two pieces of film and the sticks in between it, right? He buys the bottom film. He would buy other components that go into the actual recipe. We would buy the top film. We would have that printed with all of our branding and all of that on it. And you send that all over to him and he puts it all together. Rishi and I are both very weird like that. You're like the same way. I just want to know how things work, right? So you can dissect things in different products and see how everybody else is doing it. And we took all the best ideas or pieces of other brands and put it all together. And over time, you've actually iterated a bit from there too. Made the packaging even better. We used a thicker film than we used to. We started printing on the underside of the film. So we get more real estate to print on. This is not a lot of real estate on the very front of the stick. So now you flip it over and you've got more print on it. You peel it open. Now we have our chomp sparrations like these like happy quotes underneath the sticks. So we keep getting better and better even the product gets better and better from a quality control perspective as well. Always continuously pushing. Who were the first people you sold these sticks to? Crossfiters. That was a crossfiters. So going across VGIMS, I created that website pretty early on. I did a WordPress website first, which was not very good. And then Shopify was like just getting pretty huge or I had just heard of it. And I created a Shopify website. That was pretty baller compared to the other one. Built that one myself. It was maybe a $200 template or whatever. And I just customized it and got it going. And created the packaging on a $99 Photoshop elements subscription. So it had Cal hide on the back of and the actual chomp slogan. It was a Cal brand. So it looked like a kind of a rusted like Cal brand. It was terrible packaging. It looked okay. But if you think about who our core customer is now today, it's definitely a way off brand. Like it made no sense. But it was good enough to where I could get people to try the product, give feedback. We actually ended up selling that with that same packaging for over four years. And we lighted Trader Joe's with that packaging. So we sold over a million sticks at Trader Joe's with that packaging before we ended up doing a brand refresh and getting all new packaging. Yeah, I created that myself. I would go to the grocery store and buy all different types of products, chips and anything. And I would just cake little pieces of what these designs looked like on all the packaging and try to put that out mind and create my own packaging with it. And then you have to send that to the USDA and get their approval. So there was a bunch of back and forth with them just with a content and the words you use, the way you phrase certain things and then got their approval. And that was it off to the races. Do you know how many sales you made in your first year? Yeah, it was low. It was like $35,000. But we started in September of 2012 and then we did about 30 something thousand by the end of the year. And then the next year was like, we did over a hundred grand the next year. It was all side hustles still at that point. I was still selling real estate where she was full-time operations consultant. So he was traveling all over the world doing ops consulting at Alvarez, Marcel, which is a big consulting firm. And then it was everywhere uncrate.com. Yeah, remember those guys. Yeah. Yeah. And so it's basically curated list of cool stuff for guys that have disposable income to buy. And their editor has got a hold of the product and randomly posted about it. This was in November of 2013. I was driving a U-haul down from Chicago down to Naples. And my wife's following me in her car and that we were moving back from Chicago down to Naples, Florida. Recheade my business partners in Bali on his honeymoon. And then I hear my phone just going off. It's like crazy. Like all these different like noises coming from it. Like, what's going on? I'm here. I look over at it. I've got thousand thousands of orders through Shopify. And I'm like, damn, what the hell happened? I'm like, maybe we got hacked or like there's something going on. Like the website's broken. Like, pull over next. I'll take a look at it. So if you look at Shopify, you can actually see the referring website for all the orders. Every single one of them was uncrate.com. And so we sold thousands of orders over like the first couple hours of this thing being live. And it was live for like a week. And we didn't have enough inventory to fill those orders at all. It was interesting to us too, because it was the first time that we've ever sold anything outside of CrossFit. Like we usually sold to like CrossFit, Whole 30, Paleo. Like people that really understood the product. Like we made it for them, right? Like we didn't think anybody else would be interested in this thing. So we realized like, this is now something that the masses everybody wants this stuff. That was really an eye opener for us to steal the deal that this thing has real potential to get big. But yeah, we took two months to fill those orders then. So we had to do a production run. And our lead time is forever long because we were bringing these in from Tasmania. So we rushed everything. We were able to get the product in. We emailed every single customer and said, listen, we sold out within hours. We're not expecting this. We're making new fresh product right now. But it's going to be as fresh as it gets when it gets to you. You can either wait until we get the product and ship it to you or you can refund your order. Like nobody asked for a refund. Nobody. They are like, no worries. We'll wait. So we just packed orders for the next two months as product came in and ship it out. That was like a game changer for us. Again, thousands new people, thousands of customers that have already bought the product and then you get the repeats on that. And it was like, okay, this is going to get big. So we went from like 100,000, 400,000. The next year was 2016. And that's when we landed Trader Joe's. So we launched in August of 2016 with them. We did 4.3 million. So we taxed the business from 2015 to 2016. What was your expectation when you started this? It was such a great story where you were trying things. It didn't work. You learn and learn. And I think when people start business, they're like, well, I've got to create a billion dollar company or some large thing versus like, let me just try to make something I like and then see where that goes. What were you imagining? That's exactly it. This is a cool product that should exist. I want to eat these. Other people might too. And this is a great side hustle for me. Like I thought real estate was going to be my bread and butter. And Rashid always thought he was going to be a consultant. But we were both like, we'd be really great to have some sort of really great, you know, side hustle, but also some of the builds over time that recurring income to something that's like a passive income almost like we can work on it in a spare time. But then it just continues taking orders while we're selling real estate, whatever else we're doing. I did not think it would be a chance of competing with the big guys in the States with the number three meat snacks brand in the country right now with jack links. Jack links. Lengen's chops. It's kind of great. These people still eat the first two. Is it the similar meat or is the meat very different? Very different. I think jack links is mostly his beef. But I think slim gem is there's some beef, some pork, some mechanically separated chicken in there. So it's that's very different. Looks more like slim gems in terms of format. But that's really where the common alleys stop. If you look at the ingredients, the way we make the products is very different. Have you gone to the farms to see the cows? What's it like talking to these meat people? It's amazing actually. So more to learn about the product that that I sell, the more passionate I get about it because I see the farmers, that's the coolest thing, hearing how passionate they are about raising animals. One of the quotes I've got actually from Australia, this is actually in Tasmania, we met with this giant of cattle farmer. There's actually some pictures on our website with me standing next to him and you see me and I'm not a big guy but this thing is probably like, he's close to seven feet tall and maybe 300 something pounds a beast, the guy is huge. So he's telling us, he says, he's I'm going to cattle farmer, I am a grass farmer. He says the grass needs the cattle, as much as the cattle needs the grass. And I was like, wait, what? And so then he goes on like teaches like why? And like without the cattle roaming the grass, the grass is not going to grow and regenerate like it should. And it's the way like nature works, right? So I was like just mind blown. I knew a bit about how this stuff works in terms of regenerative agriculture and rotational grazing and all the things that we do and we've been sourcing this wave. I say really understand how important it is but the way we do things here in the US is ask backwards and it always is. It's over industrialized, you're always trying to get more satin up the cattle however we possibly can and they just do things the right way there. And this is all this stuff that they've known for generations. They don't change anything, right? This is how it works, this is how nature works, right? So they kind of look at you like at two heads if you start asking about like seed lots and corn fed and they're like, wait, what? So all of this beef is grass fed. They're like, what else are you gonna feed them? Like yeah. What was it like seeing all the animals? These animals live on some of the most beautiful real estate you've ever seen in your life. It's an island obviously Tasmania and the most beautiful view you've ever seen. It's just like cliffs and green rolling hills and thick wash grasses, soil there is about 17 feet deep of this red volcanic ash, which is like incredibly mineral rich, it's perfect for growing grass and the climate's perfect for raising grass like cattle. So all of it just comes together like these animals are incredibly happy living with a live. I was a cow I'd want to be there for sure. (laughing) Maybe not part of your business. (laughing) 'Cause I'm sure Jack Links and Black, what's the other one? It's like, they're probably like, yeah, these guys copy those. Did people copy you guys right away? Did people like call the use places and try to make chips instead of chumps? (laughing) Once we had some success, initially people kind of looked at us like, what is this? This little e-commerce brand, what are they doing? And then we really started making waves and then at least in the meat snacks world. Then yeah, then all the jerky brands, most of these brands started in jerky and then now they're adding meat sticks into the portfolio. Most of them are realizing that sticks are the better format. One, that's what people want. It's easier, more convenient format. You could fit it in your pocket and your purse, wherever. You're not sticking your hand into a bag and getting all greasy and nasty if you're like traveling. I mean, there's like a whole list of things. It's a more tender product. You're using almost like ground beef instead of steaks, like a whole muscle, which is why jerky is so much harder to chew. Right? There's no fat in there. It's just dried whole muscle jerky. And so all those things combined just makes our product a lot more desirable. And then I think from a business perspective, it's also better margins. So if I'm thinking about my cost per pound for a ground beef, which has a lot of fat in there, which people want the fact, tastes good, and especially if you're being keto, then you need fat. We have the winning format. How did you guys close the Trader Joe's deal? How did that all go down? What's the backstory there? 'Cause that's where you said you guys started 10xing the business. Yeah, so that fell into our lap, honestly. So what happened was we got our whole 30 approved certification. It's a good food elimination program for 30 days. And then the idea is you're essentially after the 30 days, you reintroduce certain foods back into your diet to see how your body responds. And as you're doing that, you're probably gonna learn a lot about yourself and how your body responds to certain ingredients or foods in your diet. And long and short of it is a lot of people when they do these whole 30s, they find foods that are terrible for them, make them feel bad. They feel a lot better off of them. So they're able to cut them from your diet after that. It's a amazing community of people. Melissa, Urban's Founder, she's awesome. She's built this insanely loyal, very engaged and active community. So when she's recommending a product and it's got the whole 30 approval, the whole community is gonna go get behind it. And so that was huge for us. And so what happened was we were getting big into the whole 30 community. One of those is actually a daughter of one of the VPs at somebody very high up at Trader Joe's, brought them home 'cause she was on a whole 30 and had the family triumph. And I gotta call myself on saying, we love these products and what they put them in the store. I had the obvious discussion around, can you handle the volumes and I'm a sales guy, so I'm like, hell yeah, can. And those discussions started in about February. One of the cool things that most people probably don't know about Trader Joe's is their quality control process is insane. I had to use three separate food labs to perform all the different tests on our product to check the boxes for them, right? 'Cause they have, you gotta prove out all these different things. I ended up having to use an actual forensics lab for one of them. They're like a food lab is like, who's asking you for this? I'm like Trader Joe's. So yeah, I use a forensics lab to get one of the specific tests. I can't remember which one it was. We got past the quality control, red tape, and we were able to launch in August. So that was huge Trader Joe's, and it's one of the best stores on earth. You go in there and people that die hard, Trader Joe's fans and they're in there. We've got millions of people trying the product overnight. That was a game changer. Was there a consideration Trader Joe's creates through a meat stick? 'Cause they have their own jerky. Yeah. That's always a consideration. And as a brand, we're performing really well for them. We've actually had a recent discussion too. It was like, "Chomp's been here for a long time. You've been a good partner, and we're not playing on it anywhere to make our own product." And fairness, the product that we make is actually difficult to make, and we spend a lot of time and money on the quality control side of things, especially on inspections. There's a lot of even meat snack brands that don't want to do what we do. We hand inspect every single stick that we make. So we started doing that back when we were making 1000 sticks, and we kept doing it as we were making tens of millions of sticks every month. And so we've got a really robust quality control process and we spend a lot of money on it. And most people just don't want to deal with that. So I think they're pretty happy with all the investment and time you put into it to make sure that their customers are getting the best possible product. Interesting. Would have been some other inflection points up to where we are today. Yeah. COVID was actually an interesting one for us, because everyone's COVID probably built your business for you, right? Like, everyone was buying snacks, pantry stocking. That was good for us for about a month, and then selling pull the rug out for the meat thus. Trader Joe's is a perfect example actually. So if you remember, do you shop at Trader Joe's often? I do. OK. So if you remember, they went from doors wide open to as many people in the stores want to come in to limiting it to 10 people in the store at a time. And on top of it, they put plexiglass up. So we're always at the registers. So all those 10 people that were in the stores at a time, even if they saw chumps, they couldn't touch it, because it was behind a sheet of plexiglass. So it was basically a chumps museum as they're checking out. And so they can't even get the product if they wanted. So overnight, the sales bottomed out. And then they had a bunch of their normal ordering patterns. So we have a bunch of open POs that we've already produced against. And then within those POs, you also have to think that there was a big spike in demand. So they were sending us big POs, bigger POs than we've ever seen before in the beginning of COVID. And then once they decided they're going to shut the doors, they say, we don't need any of that product. Sorry, cancel all those POs. So I'm stuck with millions of dollars of finished goods. But I've already produced for every one of my other customers. I have no home for this. And it was like, how do you figure out how to move all these sticks? I don't have another home for this stuff. The initial thought in my head was like, oh, here we go again. We're going to lose it all. And everything we built, it's all gone. And then it was like, no, what? I'm not giving up this time. And we're going to fade this out. And so we did. Our team is awesome, by the way. We didn't let go of a single person during COVID. Even when we saw all the company was going under, we let everyone know, like, listen, this is really bad. This does not look good. But we all need to work as hard as we can together to try to figure out how to move this product. So we did. And then what happened was once COVID kind of died down a little bit, they'd doors open back up. They started being a little bit more loose with their rules. The sales picked up and pretty much skyrockets from there. But now we've got all these new customers that we never had before pre-COVID. Because we ended up having to find new homes for the product. We ended up having a whole bunch of new customers. So they may come out of it. And now that sales are just going through the roof, because every single one of those customers were doing really well for us. And then shortly after that, we landed Costco. And that's crazy volume. Let's see, in 2020, we were about 40 million. And then the following year, we did about 80. Last year, we had about 205. So we'll keep doubling now out of COVID. And then this year, we'll do over 400. So let's bonkers. It's a lot to keep up with. We call it the Choms Roller Coaster. Because there's always something to worry about. This is like any business. But it's like the highs and lows are so extreme that it really does feel like a roller coaster. Especially coming out of a COVID situation. But the team has really worked really hard. We're approaching 100 people right now. But the rule of thumb in our space is usually you have about one FTE for every million in revenue. So we're operating with about 25% of what you should at this scale. And we're going really quickly. Well, ways to pass what we're doing this year next year already, just based on where we run right now. That's crazy. Where did you find homes? Like, what did you guys do? Said you had all that inventory. Yeah, we got really creative. Well, out of these, like, just e-com based third party e-com websites. It's like a subscription box for ugly fruits and vegetables. It's like the brew stuff, right? Yeah, misfit foods bought them and thrive market was another big one. - Perfect food. - And we got really good at partnering with those guys. And so our e-com team, it was obviously good at selling through our website and then our sales team to stop trying to sell to regular retailers because what was happening to, actually, we couldn't even get on some of these trucks. Like, even a fight in K here are top distributors. They were worried about only sending in toilet paper and paper towels and soap and like very basic items. No one was worried about putting chumps on a truck. Even the retailers that we had, whole food, sprouts, all those guys, we couldn't even get the product to the stores because we weren't getting on the trucks. So we were just out of stock like everywhere. So that product wasn't moving either. It was just like a really terrible time. There was enough pent up demand obviously. People were finding it. There's enough demand for the product that people were like realizing like where it was popping up and we would just make announcements like you could find chumps here now, find chumps here now. And we eventually just moved through all the inventory we had. But yeah, I could say if we didn't have a 13 months shelf life like we have on our product that would have been a different story because it took us some time to figure out how to get it all moved. But we won't sell product though past nine months. If there's not nine months left, at least nine months left on the product, we won't sell it. So it was probably just about two months before we figured out how to move all of that. That team is freaking awesome. They're like amazing. It's like a powerhouse team. What's behind the scenes of working with these major distributors like the Costco's and the whole food and sprouts? Yeah, partnership is incredibly important. What happens is for a small startup, it's like very one-sided, right? Doing whatever they say in hopes of getting on their trucks and hopes of getting some distribution and in their warehouses, it's just a struggle. So once you could get past that breaking point where you're moving enough volume where they're actually taking you seriously and they're paying attention, that's when you can actually have a real partnership. So luckily we're here now. But I would say in that early days, it's really difficult. They only have a certain amount of space in their warehouses. They want to keep stuff turning. And if they're not gonna put chalms in there if we're not selling, the whole time in the beginning, you're like scrambling, trying to make sure that the product that goes into their warehouse comes out as soon as humanly possible. And so you're just trying to find all the different shelves to them to go and distribute to. You gotta do whatever you gotta do man. If it's doing freefills, a freefill means I'm giving free product to a retailer. So I might say, hey, you on your store down in wherever Austin and I say, hey Noah, here's three free cases of chalms, just put your order in and I'm gonna comp it. And so then they're pulling it through that warehouse. And so to unify or take it, they don't care how it's happening. They're getting their money and the product's moving. So they're happy about it. So as a small brand, you gotta do a lot of that. Freefills, terrible. So hard. It is interesting for others out there. It's how can others think about using partnerships as a distribution and maybe you can share high level of the $400 million, like what's the breakout of your D to C Shopify versus these Whole Foods Costco, Trader Joe's versus other two percentage. Yeah, there's a lot of other. So I'm gonna say wholesale makes up right now. It's over 300 of that because we're quickly approaching a $100 million e-commerce business, which is huge. That's been a gold hours for a while. And so we're like, from a run rate perspective, we're here. What's happening right now for us? Amazon's big for us. We're on allocation, which is not a fun thing when you're a fast growing company. What that means is every single stick that we're making and we're selling and we're basically pre-selling. So we're having to tell big retailers that they're sending us POs. We're having to cut POs and say, you want to order $500,000 of this. I can only deliver 100,000 of it or whatever. But that's what we're working through right now. And so like, how do you prioritize which retailer you want to sell to and it's a stressful time? So that being said, the channels that we can control are like D to C because our website, we can just turn off the website and stop selling on it. Use all that inventory to fill Amazon, Walmart, wherever we're trying to make sure keep our retailers happy. So we're scrambling right now on the supply chain side. It's really exciting. It just takes time and money to solve these things. We're just building up production capacity, getting additional beef suppliers. It's like the whole redundancy across the supply chain. That's what we're doing. We're growing so fast right now. We started this year in January. Our budget was less than $300 million. We thought we were going to do $290. And we're going to do over 400, well over 400. So like how do you even plan for that? We didn't have the team to support this. We don't have the supply chain to support this. So many things. Our line of credit, we had to increase the line of credits or scrambling to do that. So there's all of these things. Like the fast growth is cool, it sounds cool, but the wheels could fall off really quickly. If you don't have all of these pieces put together, that's your bottleneck. And if you have a bottleneck, you're not growing. So that's the problem. So it's a fire girl. No matter what. What are the elements that others can learn in their own business to have this kind of like hyper growth that's happened within years that others compare a lot of look for? So it's building on what I just said. If you can make sure you have the capacity and the supply chain to support the growth before you go out and invest in growth, you're investing in advertising or whatever you're doing is partnerships. That's key. You have to make sure you have the ability to continue scaling. And again, like the fast growth sounds so cool. People are like, oh, there's brands killing it. But now for me, what I'm worried about is how many people are going to the store and how to go buy choms and it's out of stock so they can't get it. And then do they go pick up another product? Do they find our substitute or replacement? And do I lose that person forever? So that's some things that keep me up at night. So I think first and foremost, just making sure that you've got your setup to handle the growth is important to an extent. Because you invest a lot, usually setting up for that type of growth or support. I'll give you an example. We have brands that we compete with in our space that went and built these huge production facilities thinking that all this growth was going to come and it never came. So now they're paying for a huge facility. It's eating into their bottom line. They're just trying to find a path of profitability and they can't because this facility is sucking them dry. That's the opposite side of it is we did one thing. We didn't invest enough. We didn't get ahead of it enough. Those guys went way too big, too fast. And it could kill their business. I can try to find that balance is really important. What else is there? I can tell you, I'm a brand side. It's understanding your customer. If you don't understand who your core customer is, and in our space, it's like an attitude. And you know, that's so important. So there's people buying the product, which is usually mommies. There's women, tons of women buying the product and stores all over the country. There's people that are actually using the product and eating the product. And you have to know understand both of those. And so when it comes to branding, messaging, advertising, all those things, I need to make sure that I'm messaging and speaking to my core customer. That's a big miss. A lot of brands don't really understand who they're actually selling to and who's buying the product. Would you ever assume that we've got over 70% female customers at Choms? How'd you find that out? Is panel data? And then we were able to actually do that on a having a lot of e-commerce data, too. We were able to figure that out very quickly. Now we have partners like numerator, we buy data, numerator is awesome. So they're using receipts that are submitted to them. It's almost like panel data as well, but it's all receipts, huh? I can find out everything from who's buying my product, how often they're buying my product, to intervals in between each time they buy the product. I can find what are the brands or in the shopping cart with it? Such cart data, basket data, so I can figure out. If I'm thinking about innovation down the road and I'm finding that people are buying a lot of cream cheese with Choms. I can maybe say about making cream cheese. It's that sum for some reason. People are buying cream cheese and Choms together. This is a stupid example, but we get so into it with data, we buy a lot of it. We over invest in it now because it informs every other decision that we make. What have been some of the unique or interesting ones you guys have made with these insights? So a lot of it's like flavors. So we'll do turf analysis, which will tell us the best performing flavor profiles for a core audience. And so when we come out with a smoky barbecue flavor, which is coming up next, we're relying on data to tell us which one to do next. So every decision that we make at this stage, it's not like we used to. Aces be like, "I kind of want to make a jalapeno stick." And then I would take our original flavor and I would just add chopped up jalapenos to the recipe and that was literally our innovation. (laughs) So that's how we came up with student number two. Adding some chopped jalapenos to the original flavor sticks. And it's one of our best sellers. (laughs) What's fascinating is like you are the apple of startup or D to C food businesses in the sense of, if you actually go to chomps.com, you don't have that many skews. In terms of like unique flavors, you have seven, eight, 10, I don't really do a full count, but it's like crazy to build a half billion dollar company on 10 products where you come back to your focus and find the thing that's really working. We call it innovation through simplification. And it's one of those things that we're just trying to never forget about. Our biggest innovation recently was not adding a new flavor. It wasn't adding a new type of product. It was putting a single stick and I took eight of them and put it in a single bag. So I've got eight sticks in a bag now and put that in the shelf. And guess what? It like quadruples velocities. 'Cause what's happening now is people instead of grabbing a handful of sticks or a couple of sticks at a time, grabbing a bag with eight of them, and it's driving consumption through the roof. So if you're eating two, three sticks a week now, you've got so many more in the pantry, like you just go and grab it up. And the good thing about it is it's great product, it's a healthy product. At some point, you could probably eat too many, you probably get sick, but if you eat a lot of anything, you get sick. What are some of the other numbers? 'Cause I think your business has just different numbers in the tech world. I just didn't hear about like free fills and consumptions and velocities. What are some of the key numbers that you're looking at in your business? Nowadays it's household penetration. Give me the juice on this. This is a thump of spicy. Yeah, that'll basically tell you that's like a couple hundred million homes in the country. It might be 160 or something. And we're at about nine percent household penetration. Slim Jim, for instance, they've got about 15% household penetration or Jack Link's has even higher. They're in the 20s. So you kind of get an idea of how many households across the country are eating the product. This gives you a really good idea from a brand awareness perspective like where are we right now? The other one that we'll look at is Byrate. Byrate's gonna tell me, so if I'm wondering about you know a your my customer, I wanna know how much money you're gonna spend on chomps every single year. And so this is taken to account is every one of your purchases each one of your purchases and how many times you purchase each year, right? And so that on average is gonna give you a number. Hours is about $30. If you wanna figure out actually just high level back of the envelope math to understand how big your company is in terms of revenue, it's take that number of households. This is called 10%, right? 10% of let's say it's 160 million, I don't know if that's the right number anymore, but that's 16 million people buying my product times 30, right? So you do that math and you've got a number and that's how much revenue I should be able to do a year. That's all very high level. It's gonna be directional. The other one that I'm looking at is repeat purchases. So I wanna know my repeat rate is, so hours is like over 40, which is huge. That's like amazing. 40% of the time if you buy chomps, you're gonna buy it again. So you wanna know that if you're looking at investing in them, whatever, a brand here, but trying to buy stock or whatever, people are not buying it again. Like I give you an example, like beyond me, created this like jerky. They had tons of sales initially, 'cause they went out and they bought all the shelf space. They paid a lot of it, it's called sliding fees. So they buy the shelf space, they put free fills, they put the product on the shelf and then people buy it once. So they sell it once, people try it, like this tastes terrible, never buying it again. They have zero percent of the rates. No one's ever buying it again. So then you just know this thing's gonna fail. So we knew right away when the on me came out, guns blazing, we're fighting for the same shelf space as those guys, but they came out and they had so much money behind them, they were able to buy the shelf space. And we were just like, look at each other, like, oh my God, this is just a matter of time before they're gone. And then all that shelf space opens up and we're gonna go in for it. It's exactly what we're doing right now. So that data not only tells us how to distract the hour brand, but it shows us like our competition. We get a really good pulse on, there's some space that's probably gonna open up for us eventually, so let's count on that. Dude, your stuff is so cool. That's what I love it. What was it like competing with Jack links? You mentioned in passing to me, you're like, "Gil, those guys are aggressive." I don't know anyone that eats Jack links. I only know that, oh, that's what you get when you're driving somewhere. Yeah. Well, it's it. People are driving all the time. They have a great business. Those guys built the category for us. You can't be mad at those guys. And first off, so Jack links is Troy links dad. Troy link is the dude's a beast. Like he is a beast. I've hung out with him. I'm a buddy of his. I've got a fisherman on his boat. He lives over on the other coast of Florida. I love fishing and he actually fishes more than I do. I have a ton of respect for those guys and the business they built again. They're ruthless. It's not fun trying to compete with them, but that's just the name of the game. You would think like a jerky guy or me guy, whatever, it's gonna be like a bubble type person. Nah. Troy is sharp. How are they ruthless? What's an example? They have the scale and funding to do things that can move entire categories or compete with entire categories. So if they want to right now, they'll reduce their prices on shelf at to a level where no one else can do it. And that's it. That's it. You can't compete. So if no one else is gonna buy any of the competitors products because yours is so much cheaper and he doesn't care. He's gonna lose money for a year or two years, whatever, just to make sure that you're toast, you'll do it. It's not just ruthless. It's more of like strategy. He's like extremely strategic and he's got weight and he gets thrown around. So that's it. It's the way it works. He's the incumbent and you can't hate on that. So I wish I was in that position, but we're not. What do you guys not do as a brand and what do you guys not do as a business? I guess I was curious about that. Will you never make a jerky? That's something interesting in businesses where like an app zoom will people like, you gotta take equity from the companies you're promoting and it's just something we've just never done and I don't think we'll ever do. I guess I was curious how you guys think about that. I mean, there's so many guardrails that we talk about. But yeah, in terms of innovation, we won't do jerky. We won't, we don't think it's important. I said, we already have the best format in Meet Snacks. There's no point in making any other Meet Snack format right now unless it was something new and exciting. That's like true innovation. But trying to compete with products are already on shelf right now, just plapping out a brand on it isn't really what we're trying to do, at least in this category. I do think there are categories that are right for disruption, not just in general, but from chumps. There's categories that were really interesting where they make a lot of sense. There's a ton of alignment. There's a lot of overlap with our core customer already where I've already got my sticks there. I think these same people will buy X product, right? And so we've got some ideas on that that would make a lot of sense. But here's the thing though, so when it comes to innovation, again, keeping that whole innovation through simplification thing, like that in mind, the only reason that we've been launched in innovation is to continue what we find that we're clapped towing. And we have to break through some level of growth, right? And then you rely on growth at some point. At this stage, we don't even know how high is high and how big we can grow. And in 2021, we did a private equity raise. And we did our first white space analysis and just telling you like, based on all the data, white space or the shelves that are left, the channels that are left, this is how big it could probably build chumps to. And back then in 2021, we thought it was around $600 or $700 million. And that's like retail sales. And so this year alone, we're gonna do over 500 million. And so we're realizing now, we're not even in convenience stores. We just launched actually in twos, really high end, like nice, really cool little stores. But there's hundreds of thousands of sea stores all around the country. We're only in right now 20,000 retail doors. That sounds like a lot, but there's hundreds of thousands for us to go into like the white space is huge. From a channel perspective again, like sea store. If you think about Jack links and slim gems, I think sea store makes up like 70 or 80% of their entire revenue. So if we can get anywhere near that type of scale without product, we got a long way to go. So yeah, in terms of, we used to think that we would need innovation to build chumps over a billion dollars. And that's not even close. We get to multi billions with just chumps, just with our sticks. That's good to know. I like that. (laughs) There's a lot of things in here that everyone can use in their own businesses. But also the level of sophistication is probably higher than people expect. But that's also how you get to also hire levels of business. Where you have data to make your decision. You are thinking about certain key targets than how do you optimize around that? How different was your business operated before and after taking private equity? Not incredibly different. We'd say we've got not just smarter about our business though. And it's because these guys are incredible. It's called stride consumer partners throughout Boston. They're former Castanella team. So they've done brands like Jenny's ice cream, Yasuo ice creams, another one they just sold, Senchia water. There's a bunch of them in there. But stride, they're amazing. So they're incredibly intelligent. And when we went to market, by the way, we were looking for someone that was-- it wasn't just about the cash. It was like the dollar amount was table stakes to be negotiating or whatever. We were making sure that we could bring in a partner that we can learn from. And someone that's built a business to far beyond where we were and had the scar tissue to show for it. We always say that. I'd like to learn from someone else's scar tissue. So I want to hear about-- so funny. You get on these calls with these private equity guys. And most of them are telling you all about their successes, all about their wins. What I loved about stride, they came in in one of the first conversations they're telling us about the failures and all the issues that they faced in prior investments and the things that they learned. But I also heard about that they rolled their sleeves up and they got dirty. And I was able to verify that with some of those brands that they invested in. That's what I was looking for. Anybody could be a good partner to you when it's all nice and rosy and you're making money. Anybody's a good partner. I want to know who the partner is. That's going to be a good partner when things are going bad. And to stride us, they're awesome. We had some hiccups actually with some of the supply chain stuff right after the deal closed. And you would think that these guys would be like, just livid, pissed off, whatever. And it was like, OK, this is what we're facing. So this is how we're going to fix it. So let's put our heads together. It was just like rolling the sleeves up, getting dirty. And I love them. They're great. Yeah, I learned so much. So they have great operating partners. That's another key thing to you. If you're raising money from a private equity group, look at their operating partners and interview those guys. That's going to be most of the value. Because anyway, you cut a check. Like money's money. The real value they bring is the expertise and the things that they're teaching us. So that's been invaluable. I can't even put a number on it. I don't even know. But I don't think that we would have achieved all the things that we have without them. I can tell you that. Damn respect. Let's finish up with this. What are they saying about Pete? What do you want your team saying about Pete? What do you want them saying or what do they say? I hope they say that I'm passionate about what I do They probably also say that I've got things to work on. I'll just put it that way I'll tell you like the high level of it is We've reached a certain level of Scale success whatever you want to say I'm not done yet. I don't think the team should be done yet We're not gonna rest on all our laurels We're not gonna be can become a complacent. We were giving it this opportunity that Most people in this world never get and I'm not gonna let it go I'm not gonna like squander that opportunity. It does not happen And so I'm gonna make the most of it and so I continue to push the team to do new things and It's not that I'm not happy with where we're at and maybe some of the things I say maybe the way I say it I didn't work on those things. I'm passionate and I'm trying to get sit down fast now, right? But I also think I need to take some time to celebrate the wins Vershity I are the same way man. We do something and we're cool. What's next? Cool? What's next? We got to stop doing next Most people in team are not like that and when I take the time to celebrate to know that they're doing a good job And listen, I love our team man like again. I can't give them enough props. I tried to all the time But when you're in the stick of it and you're in the grind during the day you sometimes forget my team is highly capable. They're insanely smart. There's great. Also team of amazing performers and Ten years ago 12 years ago when we were starting this to think I'd have that caliber of talent working for me All hundred of them wherever they are now. Oh my god. It just mind-boggling. I say this to team all the time I want your stock to go up because you were Involved at chomps. I want you to look back and say I learned so much I had so much exposure to all these different things these people that I rubed elbows with and I came out of that more Valuable than ever before and now everyone wants to hire me because of it. So my stock went up that it's like I just want everyone to think that Dude chomps Everyone out go buy as many chomps as you can if they're in stock That is a wrap. I hope you love the episode. I love to hear and Pete's story I'm excited to hear even more about him go buy chomps on Amazon also go to chomps.com and go give Pete some love It's Pete Maldonado on Instagram and X also if you are not on our newsletter I already told you about it But if you want to get our free first chapter of million dollar we can go to Noah Kagan.com slash first and You will get first chapter of a million dollar weekend which probably one of the best chapters in the book and You'll draw the newsletter that's Noah Kagan.com slash first Next text a friend you love them. Yo dog. Let's go grab a meat stick together and before you go slide in my DMs at Noah Kagan I love hearing from you feedback about these shows is how we make it better Finally a couple of shout-out to the amazing team who make this happen. Thank you to Jason at podcast tech.com Think it is Sylvie, Jeremy, Jade and Diego from the door team for all the magic y'all do Have a epic day. What's your favorite? snack