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In this absolute gem of an episode of the Startup CPG Podcast, Daniel Scharff is joined by Jamie Valenti-Jordan, CEO of Catapult Commercialization Services, with a focus on scaling products and supporting startups in the CPG industry.
Part 1 of this episode unveils Jamie's expertise in rapid product launch and expansion for emerging brands with revenue under $5 million. Drawing from his experience guiding operations at Hampton Creek, Jamie stresses the importance of collaboration within the startup community.
Gain valuable insights into the intricacies of new product launches, with Jamie advising a strategic approach starting from a basic recipe aligned with consumer preferences. He touches upon formulation development, emphasizing weight percentages and packaging considerations for long-term product integrity.
Jamie also explores the decision-making process between self-manufacturing and utilizing contract manufacturers, weighing the pros and cons based on preferences, skills, and resources. The profitability aspect is thoroughly addressed, highlighting the significance of cost coverage, profit-maximizing factors, and efficient production processes.
Don't miss the first part of this episode - Tune in now!
Listen in as Jamie shares about:
Determining the Gold Standard and Certification
Documentation for Quality and Scaling
Building a DIY Fluidized Bed Dryer
Recall and SOP (Standard Operating Process)
Sourcing Industrial Ingredients
Packaging Selection and Shelf Life
Networking and Professional Help
Common Problems in Product Manufacturing
Considerations for Self-Manufacturing vs. Contract Manufacturing
Cash Management and Inventory Planning
Episode Links:
Catapult Commercialization Services Website
Jamie’s LinkedIn
Don't forget to leave a five-star review on Apple Podcasts or Spotify if you enjoyed this episode. For potential sponsorship opportunities or to join the Startup CPG community, visit http://www.startupcpg.com.
Show Links:
- Transcripts of each episode are available on the Transistor platform that hosts our podcast here (click on the episode and toggle to “Transcript” at the top)
- Join the Startup CPG Slack community (15K+ members and growing!)
- Follow @startupcpg
- Visit host Daniel's Linkedin
- Questions or comments about the episode? Email Daniel at podcast@startupcpg.com
- Episode music by Super Fantastics
Creators & Guests
What is The Startup CPG Podcast?
A podcast from Startup CPG - highlighting stories from founders working towards a better food system and industry insights from experts to give you a better chance at success.
Daniel Scharff
Everybody, welcome to the Startup CPG podcast. Today we are honored to have Jamie Valenti Jordan, who is CEO of Catapult Commercialization Services, join us. Jamie has over 18 years of experience in the food industry. He's led the successful launch of over a thousand products and managed the construction of multimillion dollar production facilities. His expertise in scaling products is incredibly impressive and he also happens to be one of the absolute most important experts on our startup CPG Slack. He's always there to help brands with their questions about scaling. Catapult, which Jamie founded in 2018, has a team of over 90 industry professionals across the US and EU. They offer technical and operational support to startups and emerging brands and I was really excited to see that a majority of his clients are actually under 5 million in revenue, including tons of brands from our community.
00:54
Daniel Scharff
So with his focus on rapid product launch and expansion, Jamie and his team are doing major things in this early brand industry and food and beverage. Jamie, I'm so excited to have you.
01:06
Jamie Valenti Jordan
Thanks, Daniel.
01:08
Daniel Scharff
And Jamie is another example of someone I'm incredibly excited to bring in, who I've worked with. Also, Jamie and I initially met back in our days at Hampton Creek, which was later renamed just eat, just egg a lot of things. And when I met Jamie there, I just was immediately impressed with him because he was so knowledgeable and you don't always find that in the emerging world of food tech. And so I was just like, this guy has a lot of expertise and is an incredibly curious and helpful person. We need him as part of our Slack channel.
01:43
Daniel Scharff
So Jamie, thank you for, I think, going on four years now, being, I would say, probably the most important contributor that we've had in the startup CPG Slack, because you've always been there in the operations channel to just hammer down all the questions that are coming around, like whatever it is, the most random questions you could get in operations. I always know if I tag you, if you don't know the answer, which you usually do, you definitely will know who knows the answer. So thank you from all of us for your service.
02:15
Jamie Valenti Jordan
Now that my head's fully inflated now we can deflate as I'm now full of hot air and can share all of my perspectives. No, I'm always happy to help. I mean, at the end of the day, nobody gets into this industry on their own. It takes an army of people to get you trained on the food and beverage industry and how it works and I just want to be kind of there to help people to do exactly that. So, yeah, no, I'm always going to respond to questions, especially if I find them particularly challenging.
02:40
Jamie Valenti Jordan
Awesome.
02:40
Daniel Scharff
And man, it is fun to help, isn't it? I just got to give a really cool talk on this and sort of the do good, do well approach. And I started it just by saying like, hey, who here likes to help people? And everybody raised their hand. I was like, but why? And got some really cool feedback from people where immediately people were like, well.
02:59
Jamie Valenti Jordan
Yeah, I mean, it feels good.
03:01
Daniel Scharff
It actually does a lot for me to be able to help and it's fun and to share things that you know with people and kind of remind yourself about what you know and what kind of value you can share with other people. And it gets you excited about what you do even more. So do you find that when you're in there, just like for you, probably all of it's like low hanging fruit where you can just crush these questions?
03:24
Jamie Valenti Jordan
No, there's some really cool stuff going on in the slack channel. If you haven't gone through to it and just like scroll backwards, there's some really interesting stuff. And there were some really technically challenging questions. And honestly, you'll notice that some of the other experts that are in there and I get in debates, that's because we're right on the edge of what is considered to best practice. There are competing theories sometimes and I love getting in the middle of that and sharing kind of my perspective, which is exactly that, only one person's perspective.
03:50
Daniel Scharff
I'm never going to be right on.
03:51
Jamie Valenti Jordan
Everything all the time, but I want to provide people with the ammunition to go in multiple different directions if needed based on what's right for them and their brand.
04:01
Daniel Scharff
That's awesome. And I always tell people the operations channel is actually my favorite because a brand could spin their wheels for a day, a week or more just on a super basic question that you've seen a million times and they don't need to schedule a call with you and get you on a retainer just for an easy question. You're so generous with your knowledge and perspective and I think just probably everyone can hear it from your kind of tone of voice already. But also, Jamie is a super reasonable person where he'll provide his expertise. If he doesn't know, he will tell you he doesn't know and probably tell you who might know better than he does. And if Catapult isn't the right partner for you, he will try to find you who the right partner is.
04:39
Daniel Scharff
So I think it's a really amazing and refreshing long term view of how to provide value into our early brand ecosystem. So with that, I will stop just blowing up your head here and actually get into the meat. Give us the good stuff. All right, let's go. So, Jamie, first, can you just walk us through your background and how you managed to accumulate this body of knowledge?
05:02
Jamie Valenti Jordan
Sure. I have an undergrad in chemical engineering from Georgia Tech, where I fell in love with the food industry, working actually for General Mills as an intern. Turned down six figures with Exxon right out of undergrad to go back and get a master's in food science from Madison, where I fell in love yet again, this time with my wife, and followed her out to New Jersey, where I worked for Campbell Soup for a couple of years while she was finishing her graduate work there. Upon graduation, she found a position out in the Bay Area. So I moved out and followed her to Del Moni. At Campbell Soup, I was doing process R D, kind of scale up, commercialization, going from bench to pilot and pilot to full scale and things like that.
05:44
Jamie Valenti Jordan
But then when I got to Delmani, I also picked up, on top of all of that, then sourcing the equipment and installing it and getting it operational, building plants, things like that, including learning solar panels as another industry that I had to go learn as the solar gatekeeper of Delmani also picked up a patent in tomato peeling.
06:04
Jamie Valenti Jordan
So I can tell you one terribly.
06:06
Jamie Valenti Jordan
Inefficient way to peel a tomato. And then Del Monte was acquired, and they went through headcount reduction as a part of the acquisition, which is standard. But my director was faced with a position of having to cut one of my colleagues, who was 63 and approaching retirement. And that didn't work for me. So that's when I jumped over to, as you mentioned, Hampton Creek, where we worked together for a little bit, and.
06:39
Jamie Valenti Jordan
Then through a strange series of events.
06:43
Jamie Valenti Jordan
Ended up moving back to Wisconsin, here to be closer to family for my then two year old, who's now eight, and so he now has a giant yard to play in and a little brother, and it's all great. So, yeah, I really got a chance to kind of go out and do what I wanted to do.
07:03
Jamie Valenti Jordan
But when I got out here, Delmani.
07:07
Jamie Valenti Jordan
Had prepped me with all of these skills, and then Hampton Creek kind of leveraged all of them to the point that I had done a lot of things that those that were ten or 15 years my senior were just starting to get into the opportunities just didn't come up here as often in Wisconsin.
07:23
Jamie Valenti Jordan
So knowing what I could do and.
07:25
Jamie Valenti Jordan
What I was capable of and still had the energy for. I decided to start catapult, honestly, after my fourth beer that evening, because I thought it would be funny on April Fool's Day to start a consulting company.
07:39
Jamie Valenti Jordan
So I did, and it was a.
07:40
Jamie Valenti Jordan
Solo consultancy for a while. And then eventually I ran across problems in the emerging sector, which was where I could be of the most value, but I ran into problems that were beyond the scope of what I could physically handle myself. So formulation issues, packaging questions, things like that. So I just partnered with folks that.
08:02
Jamie Valenti Jordan
I've been working with for the last.
08:04
Jamie Valenti Jordan
1215 years and said, hey, do you guys know the answer to these? And they're like, yeah, it's a little bit of work.
08:10
Jamie Valenti Jordan
I'm like, okay, so let's engage.
08:12
Jamie Valenti Jordan
Let's figure out how to work together.
08:13
Jamie Valenti Jordan
And so we did, and it turns.
08:15
Jamie Valenti Jordan
Out the model that we built was particularly scalable. So, yeah, that's how I ended up getting into all this. We were doing the remote support thing prior to March 2020. April 2020 was the last time I had to have that conversation of, how can you possibly do r and D without being on site? This was a totally alien concept prior to then. For some reason, we still, in some cases, sent formulations to each other using actual facts.
08:44
Jamie Valenti Jordan
Not efacs, but facts. I dare say we're beyond that now.
08:50
Jamie Valenti Jordan
But it took us until then to really get there. You remember how backwards the food industry used to be.
08:58
Daniel Scharff
I don't know if I agree with used to be, but I think fair, all of that. Yeah. Operations is still like the last bastion where you're just going to see a lot of handwritten stuff. Like, if you go to a plant as kind of like a last resort check, it's good to have it there. But like handwritten notes, like handwritten records, things like scratched off, right?
09:23
Jamie Valenti Jordan
Exactly, yeah, absolutely. At least they're taking records, which is an improvement from where they were, like 30, 40 years ago. It was all memory at that point.
09:33
Daniel Scharff
Yeah, cool. And then one question on your background, which is, I just have a feeling like your child is already, like, playing with toys that will make them the ultimate engineer. Are you rearing this child to even supersede your level of knowledge somehow? With early toys, the worst thing I.
09:54
Jamie Valenti Jordan
Taught him how to do was to use a screwdriver. He takes everything apart. Everything. Like chairs and every one of his toys. He takes it apart. I give him a pen. The first thing he does, rather than use it to write something down, he takes the full thing apart, displays all the pieces, and then reassembles.
10:11
Jamie Valenti Jordan
It?
10:12
Jamie Valenti Jordan
Yeah. I don't know that I trained him to do that, but yeah.
10:17
Daniel Scharff
Okay, so what age will you start billing him out?
10:22
Jamie Valenti Jordan
Ten.
10:23
Jamie Valenti Jordan
I'm pretty sure it's ten.
10:24
Jamie Valenti Jordan
Yeah.
10:24
Daniel Scharff
Perfect. Okay, cool. What an impressive background. And I think the thing that you got to do is what I got to do also, which was come from big CPG, then out into the better for you world of CPG, where you just learn to adapt your skill set really quickly. Right. And that's why you don't just know how to build multimillion or billion dollar facilities or whatever, but very quickly, you learned how to take all of that knowledge and help very early brands by being at one when were at just egg, and that has resources and volume, but was a startup at that time.
11:00
Jamie Valenti Jordan
I actually have a good example of that. So in the middle of COVID were doing a trial at an extrusion facility, and one of the things that were trying to prove was that the dried material that was produced was, in fact, going to be viable for what we wanted to use it for.
11:18
Daniel Scharff
Can you explain what extrusion is? I heard that.
11:21
Jamie Valenti Jordan
Yeah.
11:22
Jamie Valenti Jordan
So think of it as getting a.
11:24
Jamie Valenti Jordan
Giant kind of a cylinder that's about as big around as, let's say, your head.
11:29
Jamie Valenti Jordan
Right. And then you put something that's like.
11:31
Jamie Valenti Jordan
A big screw into that cylinder. And so it continues to turn. But the screw flights are not equally spaced. They actually get tighter and tighter as you get closer to the outlet. So what it's doing is it's actually compressing the material that's coming in behind it. And actually, if you put heat on the outside of it, you can cook it or steam cook it. That's how things like Cheetos and a lot of our tdps that are out there and things like that, all of these things are extruded because they go through this die plate and this expansion valve.
12:02
Jamie Valenti Jordan
Not valve, but expansion plate at the.
12:04
Jamie Valenti Jordan
End in order to kind of flash off some of that steam and build different textures. Anyway, so what I ended up having to do in the middle of COVID.
12:14
Jamie Valenti Jordan
Is I built, over Thanksgiving in my.
12:19
Jamie Valenti Jordan
Living room, a fluidized bed dryer, which was four five gallon buckets taped together.
12:26
Jamie Valenti Jordan
I got a big funnel, and then.
12:28
Jamie Valenti Jordan
I had an old AC unit that I used to pump air through it and built this kind of wooden frame. I made it work, and then Sunday night after Thanksgiving, I loaded it in my car and drove 24 straight hours down to Tampa to use it in this facility. And, yeah, popped it up, and they're like, oh, bring it around the back.
12:48
Jamie Valenti Jordan
And so I had to lift it.
12:50
Jamie Valenti Jordan
Up onto this loading dock. And then we set it up and sure enough fired it up. It worked, but it was crazy dumb. With the AC unit not counted in there, I probably spent maybe $20 on materials.
13:08
Jamie Valenti Jordan
I mean, it was nothing.
13:11
Daniel Scharff
That's amazing. Before I knew that you were actually going to use that in a real production, I thought you were just having a good time building that kind of stuff. Both of which would make sense to me, that you would just do that for fun or you would do it for a client.
13:24
Jamie Valenti Jordan
That's awesome.
13:27
Daniel Scharff
I would just love to walk through kind of soup to nuts. So let's take an example of like, hey, just getting started because you guys do commercialization and scaling services, but a lot of people probably don't even know what that means exactly. So let's just talk through all of it. Your brand just starting out and we're going to go from there all the way through to, hey, do you need to start looking for a second Coman and that kind of stuff just to begin? Let's say back at our just egg days, I'm just somebody who works there, maybe in marketing or something. And I'm like, you know what, I actually have an idea for a product I'd like to do.
14:04
Daniel Scharff
And maybe it's like a family recipe or just something that you've had at a restaurant that you think absolutely, there's a hole in the market for. And maybe you mess around at home, in your home kitchen or you see some products that you like and you kind of want to replicate those. Now I'm coming to you. What are you going to tell me I need to do first to start figuring out how I could get this.
14:23
Jamie Valenti Jordan
Product out to market? Absolutely. Sorry, we got an echo. There it goes. Okay. Absolutely.
14:33
Jamie Valenti Jordan
So first thing we're going to want to do is we're going to figure out where we're starting from. So do you have a basic recipe? Are you able to assemble what you want the product to look like using, let's say, even store bought ingredients?
14:47
Jamie Valenti Jordan
The way that you know what you.
14:48
Jamie Valenti Jordan
Want the product to look like is you understand who your target consumer is going to be and you do some of the downstream things that you're going to have to do anyway. Like where do you see your consumer shop and how do you need to prepare it? Is it shelf stable, refrigerated? And all those sorts of things kind of go into this. But r and D is not a linear process. It's iterative.
15:05
Jamie Valenti Jordan
Right.
15:06
Jamie Valenti Jordan
You go all the way through and you build something and you test it. And if it doesn't work with your consumer base, you have to go back and do things. They have a whole thing called a test market associated with trying to do this.
15:15
Jamie Valenti Jordan
But anyway, piece by piece, first thing.
15:18
Jamie Valenti Jordan
I'm going to want to know is.
15:19
Jamie Valenti Jordan
Do you have a gold standard? Right.
15:21
Jamie Valenti Jordan
If you've got a gold standard, the next question is, can you build your gold standard out of industrially sourced ingredients?
15:27
Daniel Scharff
Gold standard means this is the perfect product with your recipe or something. This is the way it could be. It's perfect if it comes out like this.
15:36
Jamie Valenti Jordan
This is the user experience I want them to have.
15:39
Jamie Valenti Jordan
Yeah, absolutely.
15:42
Jamie Valenti Jordan
So even if it's not built out of industrial ingredients at first, that's fine.
15:46
Jamie Valenti Jordan
You just go back and rebuild it. Not a big deal from there.
15:51
Jamie Valenti Jordan
That will give your formulation. Your formulation is basically your recipe done as a percentage using industrial ingredients. That's really kind of the definition of a formulation. With that formulation done, you can then do things like run your nutritionals, get your ingredients fact paneling put together. But also you need to start looking at how does all that come together and how do I preserve that long term?
16:16
Jamie Valenti Jordan
Right.
16:16
Jamie Valenti Jordan
How do I preserve that user experience all the way to the point of.
16:19
Jamie Valenti Jordan
The user or the consumer?
16:22
Jamie Valenti Jordan
Right.
16:24
Daniel Scharff
Okay, so let's just walk back through that again. So let's say like, okay, I know how to make this thing in my kitchen and it's coming out really nice. And then I'll come and talk to you. And the first thing you're going to talk to me about then it sounds like are ingredients. So like, okay, what are all the ingredients that you're using?
16:37
Jamie Valenti Jordan
Where are you getting them from?
16:39
Daniel Scharff
Sorry, where are you getting them from? And, okay, if we want to do this at scale, where are we going to get industrial ingredients from? Right. So it could start with you helping people to look around and see, okay, what are the commercial sources for these kind of ingredients? And making sure you piece together that in a way that can meet whatever standards they're trying to reach or requirements.
17:02
Jamie Valenti Jordan
That you know that they already have.
17:04
Jamie Valenti Jordan
Exactly. I mean, the goal is to make the product. It's not to make something completely different just because you have to use different ingredients. No, the goal is to make that original consumer experience. Then you get into the processing and packaging of, how do I preserve that.
17:18
Jamie Valenti Jordan
User experience all the way to the point of consumption. Okay.
17:22
Daniel Scharff
And so a big part of that is then going to be like, okay, you have your recipe, but now, you need a formulation, right? Which is sort of like a step by step for, let's say, somebody who you'll never get to talk to who's at your coman, or anybody who would be responsible to make the product of the IKea version of. Here is how to make my product. Right. Which can be pretty different from how.
17:43
Jamie Valenti Jordan
You would make it at home. Right.
17:45
Jamie Valenti Jordan
I don't know if I agree with that, honestly. I think the formulation doesn't exist in a vacuum. All of the food industry is relational.
17:52
Jamie Valenti Jordan
You should always be able to talk.
17:53
Jamie Valenti Jordan
To the people who are going to be making your product. So I would say a formulation is really just representing your recipe in a particular scientific format. I wouldn't even say that it has the procedure of how to assemble it.
18:07
Jamie Valenti Jordan
Necessarily included with it.
18:10
Jamie Valenti Jordan
That would be including things like the process flow diagram and things like that, which really are translating how to get your formulation into your product format. Right. So formulation is really just the breakdown of what's in your final product.
18:24
Jamie Valenti Jordan
Okay, got it.
18:25
Daniel Scharff
It won't be the first time or the last time that you correct me, I'm sure, on this stuff, which is why you are who you are. Okay, cool. So then trying to get to that level, and can people figure out how to do that on their own, or do they need a consultant to help them figure that part out? How would they even know what they need to put into a formulation?
18:48
Jamie Valenti Jordan
Right.
18:48
Jamie Valenti Jordan
So, formulation, I can verbally tell it to you right now. What you're going to need is a list of all of your ingredients along kind of the left hand side of an excel spreadsheet. And then you're going to put next to that what percentage of that ingredient.
19:04
Jamie Valenti Jordan
You use in your product in order.
19:06
Jamie Valenti Jordan
To get to your product. And then you have to make sure.
19:09
Jamie Valenti Jordan
That all of those add up to 100%. If it adds up to more than.
19:12
Jamie Valenti Jordan
That, we got another conversation to have about all that. But at the end of the day, what somebody's going to do is say.
19:19
Jamie Valenti Jordan
Okay, I have a 50 gallon kettle, right?
19:22
Jamie Valenti Jordan
And that 50 gallon kettle is going to hold some amount of liquid, because you can't use all 50 gallons in a 50 gallon kettle.
19:30
Jamie Valenti Jordan
So all I'm going to do is.
19:31
Jamie Valenti Jordan
Just take the amount that I can fit in there, multiply it by those percentages, and that's how much of each of those ingredients I'm going to put into the kettle. The formulation is just an easy way to translate the scalability of your product from one small scale, which might be a one pound batch or something like that.
19:50
Jamie Valenti Jordan
And how to translate that to 1000 pound batch. It's just a normalized way of communication is all.
19:57
Daniel Scharff
So what's the document that you need where it's like that has actually more of like a step by step of like hey, do this step first. Make sure that you batch these things together at the beginning and then later it has all the steps for them.
20:10
Jamie Valenti Jordan
Yeah, that's going to be part of.
20:11
Jamie Valenti Jordan
The process assembly that will go usually at the point that we're talking to the contract manufacturer or if you're manufacturing yourself, then that'll be a quality document that's being put together. At the point of making sure that you have that the people that will communicate with will be things like regulators that come in that want to know how you're using and how you're assembling the product. To know whether or not there's a safety issue anywhere in your process to.
20:35
Jamie Valenti Jordan
Know whether or not you need to.
20:36
Jamie Valenti Jordan
Do a recall or something like that. Right, got it.
20:41
Daniel Scharff
I think SOP is the word I was looking for. Right. Standard operating process or whatever. So that would be like how do you actually make the thing? And then you have your formulation that actually just lists all of the percentages. And I think one thing I kept coming up against is people always tell you this and then you forget to do it. But the importance of measuring stuff by weight, not by volume necessarily.
21:00
Jamie Valenti Jordan
Can you talk about that?
21:01
Jamie Valenti Jordan
Sure. Well there's a whole lot of reasons why we don't measure by volume. But the long and short of it is weight is consistent no matter where you are on the planet as well as what temperature it is outside and things like that. Density can change and so volume can change and so your formulation can change but your nutritionals will stay the same if you always base your entire formulation off of weight. So when we talk about putting it in percentage format, that is what we're talking about is putting in weight percentages.
21:34
Jamie Valenti Jordan
Yeah. Okay.
21:36
Daniel Scharff
So like by the gram or whatever, not by the liter. Otherwise somebody will probably ask you to translate that at some point or you'll end up with a product that could.
21:47
Jamie Valenti Jordan
Be a little bit off what you actually intended. Yeah.
21:49
Jamie Valenti Jordan
And if you're going to do this at home, my suggestion is first get a gram scale from Amazon.
21:54
Jamie Valenti Jordan
They run like 35, $40.
21:57
Jamie Valenti Jordan
But use that to portion everything out. So if you know it's exactly one tablespoon in your house, great. Just measure the weight of a tablespoon of that product like it really doesn't matter. Don't use ounces. Just use grams.
22:08
Jamie Valenti Jordan
It's easier, I promise.
22:10
Daniel Scharff
Okay, perfect.
22:12
Jamie Valenti Jordan
All right.
22:13
Daniel Scharff
At this point, let's say now I kind of have my general recipe. If I'm trying to source industrial ingredients.
22:21
Jamie Valenti Jordan
Without your help, how can I actually do that?
22:24
Jamie Valenti Jordan
That's the hard part because industrial ingredient suppliers do not maintain a very good presence online with the things that they actually sell.
22:33
Jamie Valenti Jordan
Those of us in the industry, we.
22:35
Jamie Valenti Jordan
Know folks, because we spent the time building the relationships and things like that. That is where you first need to use some professional help. Because to build those relationships yourselves can.
22:46
Jamie Valenti Jordan
Take over two years. So don't bother. Right. Pay somebody to just give you the.
22:51
Jamie Valenti Jordan
Contact names of the people that have the ingredients that you need and work with those ingredient suppliers to have them send you the right things. If you email me, as long as it's under like 1015 ingredients, we'll probably just send you those contact names ourselves directly.
23:08
Jamie Valenti Jordan
Right.
23:09
Jamie Valenti Jordan
We won't bother billing anybody because it's just about who you know. So I don't know that you necessarily need to pay for that. But then what you have is once you have those ingredients at home, you need to spend the time putting it back together to make sure you get.
23:22
Jamie Valenti Jordan
Back to that gold standard. If you want some help on technical ways of doing that's where people.
23:28
Jamie Valenti Jordan
Say, well, you need a food scientist. Sure, they know the tips and tricks of the trade. Because we've done it so many times, we know how to get around certain technical challenges. So, yeah, that's a place where you might want to pay somebody if you're trying to go speed to market rather.
23:43
Jamie Valenti Jordan
Than doing it yourself. But I would say for the most part, we're still at the point of.
23:50
Jamie Valenti Jordan
Let'S leverage a little bit of technical expertise out there, but then if you really want to do it, you can do it.
23:55
Jamie Valenti Jordan
Bootstrappy.
23:57
Daniel Scharff
That's an amazing offer from you guys. And then otherwise, people probably without your help might just be googling around like, hey, who's a supplier for this? And find a source. You may not know if it's a good source or a bad source, how to compare the pricing you're going to get. So you could luck out and get the perfect supplier, or maybe a friend just tells you who they're using, but.
24:18
Jamie Valenti Jordan
It also could work out poorly.
24:21
Jamie Valenti Jordan
And there's even other resources out there. So the naturally network can also be a good source of getting to know people in the food industry. Same thing with IFT. Not that I'm plugging other groups in the food industry, but hey, we're all in this space together. We're all members of all these different groups, so let's leverage that.
24:38
Daniel Scharff
Yes, I definitely am a member of a bunch of them. Yeah. Okay, great. So let's say at this point, I've worked with you guys and we figured out, okay, here are the ingredients that we're going to go for. We've checked that it's going to match the gold standard. Everything's looking good. We've got the recipe, we've got the formulation, we've got the SoP. And so what about packaging? I think probably if you're an early brand in your mind, it's like, great, I'll just get a designer and they'll do something cool, and then I'll be ready to go.
25:08
Jamie Valenti Jordan
What are they missing?
25:10
Jamie Valenti Jordan
Well, we're missing the substrate, and that's the functional piece of the packaging. The whole purpose of packaging initially, aside from being a billboard from which to advertise from. But the whole purpose of packaging is.
25:22
Jamie Valenti Jordan
To preserve your product.
25:23
Jamie Valenti Jordan
It's to make sure that your consumer experiences the product in the way in which it's intended. What that means is it needs to be able to resist the forces that are going to try to break down your product.
25:32
Jamie Valenti Jordan
That is, light, moisture and air.
25:36
Jamie Valenti Jordan
There's a few others, but those are basically the big three. So most products are packaged in some.
25:42
Jamie Valenti Jordan
Form of light.
25:46
Jamie Valenti Jordan
Non permeable product. So whether that be metal or a.
25:50
Jamie Valenti Jordan
Dark plastic or something like that, all of those things are meant to prevent light from getting into your product and causing it to start to break down.
25:58
Jamie Valenti Jordan
On the moisture and oxygen side of things. Almost everything else is permeable to moisture.
26:04
Jamie Valenti Jordan
And oxygen to some level, except for.
26:08
Jamie Valenti Jordan
Maybe glass and metal. So if any type of plastic doesn't matter which one have an oTr.
26:15
Jamie Valenti Jordan
It'S.
26:16
Jamie Valenti Jordan
Going to have an oTr, which is an oxygen transmission rate and a moisture transmission rate. Both of those things are how quickly those two materials are going to get into your product.
26:26
Jamie Valenti Jordan
So for, let's say, beef jerky, because.
26:30
Jamie Valenti Jordan
This is a common one, you have a little silica gel packet in there that is meant to absorb any sort.
26:37
Jamie Valenti Jordan
Of moisture that gets into there, right, to keep it from molding out, even though they've got it in a foil.
26:45
Jamie Valenti Jordan
Line pouch, things like that.
26:48
Daniel Scharff
You really.
26:49
Jamie Valenti Jordan
Need to protect against it. So that's when you get into things like modified atmosphere packaging and yada, yada.
26:54
Jamie Valenti Jordan
So there's a lot of different tips and tricks of the trade on how.
26:57
Jamie Valenti Jordan
Do we work with packaging to preserve the length of the shelf life of your product. Many things that people struggle to get past three months is just a matter.
27:07
Jamie Valenti Jordan
Of selecting a different material.
27:09
Jamie Valenti Jordan
So if you have products that are dying out, usually through oxidation, meaning the oils are turning rancid.
27:17
Jamie Valenti Jordan
If you don't know what I mean by rancid, I'm pretty sure you do.
27:21
Jamie Valenti Jordan
You just don't realize that's what it's called. Think of a potato chip bag that you leave out, not just for the weekend, but let's say for a couple of months, and then you could find it and smell it. Yeah, that's the oil oxidizing and turning rancid. So anyway, there's a whole mess of things. Luckily, in the packaging field, most of.
27:42
Jamie Valenti Jordan
These packaging suppliers can help you with.
27:45
Jamie Valenti Jordan
Selecting the right packaging for you.
27:48
Jamie Valenti Jordan
Based off of what they sell, they're only going to select from what they sell.
27:53
Jamie Valenti Jordan
It takes somebody really senior, willing to represent something that they don't sell.
27:59
Daniel Scharff
Now that I think I've successfully cleared from my head the imagined smell of some salt and vinegar chips that have sat out for five months. Thanks for that. Okay, so let's say I have this product idea, but how will I even know who to. Hopefully I could be able to work with someone like you. But if I don't, how am I even going to know what packaging options there are? Are people just googling package suppliers and then talking to them and seeing what they sell, what they would recommend, or.
28:26
Jamie Valenti Jordan
How do people usually navigate that?
28:29
Jamie Valenti Jordan
Well, there's a lot of that, but I would say there's also honestly, just call it Michigan State or Clemson. They're the two biggest producers of packaging engineers.
28:39
Jamie Valenti Jordan
They're going to be able to point.
28:40
Jamie Valenti Jordan
You in the right direction in the same way that ingredient suppliers are bad at kind of representing what it is that they sell. Same is true for packaging suppliers. So the way that you do that is you go back to folks who.
28:54
Jamie Valenti Jordan
Have an agnostic point of view of.
28:58
Jamie Valenti Jordan
The industry that are willing to help. And those two schools are Michigan State and Clemson.
29:03
Jamie Valenti Jordan
Call them up and have know.
29:06
Jamie Valenti Jordan
Just tell them what it is you're trying to do and they'll point you.
29:08
Jamie Valenti Jordan
In the right direction. That's cool.
29:10
Daniel Scharff
What a pro tip.
29:13
Jamie Valenti Jordan
Yeah.
29:13
Daniel Scharff
I think what I see a lot in our slack channel is someone maybe posting a picture of packaging that's probably a similar product to what they're trying to put out and just saying, hey, anyone know where I can get this? Whether I don't know if that's the best way to do it, but that definitely is probably the shortcut to try.
29:32
Jamie Valenti Jordan
It's very effective. Yeah. Okay.
29:36
Daniel Scharff
But that's a really cool tip about.
29:39
Jamie Valenti Jordan
Calling up the schools also.
29:40
Daniel Scharff
Okay. So then I remember in my early days when I was launching a beverage, just some of the early questions we had were around, okay, we want to do a certification. We want it to be organic, which, oh my God, took forever. That was pretty unbelievable. Just all of the steps you have to go through to get that. But you need some of it to actually be complete before you can even print your packaging because you have to say who certified it on there and you won't know for a long time if they're going to certify it or not. So you can't print that packaging and start getting your samples out or whatever. And I think another main question we had was just going to be around shelf life work because were making the product for the first time. We really didn't know.
30:21
Daniel Scharff
But it's so important to have a nice long shelf life because of distributors will say, hey, we won't take the product if you've run through 25% of the shelf life or something like that, which if you have a short shelf life, is not a long time to get it from production out into the channel.
30:38
Jamie Valenti Jordan
So can you talk a little bit.
30:40
Daniel Scharff
About those two things and how you advise brands to go after certifications but also keep working on their product and trying to get it out into market?
30:51
Jamie Valenti Jordan
Yeah, the shortcut hack there is. So I'm getting an echo. Okay.
30:57
Jamie Valenti Jordan
Yeah, so the shortcut hack there is actually, unless it is absolutely necessary that your brand have the certification before you walk into the door with the sales.
31:09
Jamie Valenti Jordan
Sorry, with the buyer, just leave the.
31:12
Jamie Valenti Jordan
Space on the package available and don't put it on there until you've got it locked up. I'd say speed of market is often more important than the certification. And honestly, there's a lot going around of people wanting a ton of certifications.
31:25
Jamie Valenti Jordan
That their target consumer may not care about. At the end of the day, what.
31:30
Jamie Valenti Jordan
You want is something that moves the needle on purchase intent. It's not necessarily about covering your package. With every certification that's out there, I get a lot of those requests and then they say, well, how much is each certification thinking?
31:43
Jamie Valenti Jordan
It's a grand apiece or something like that.
31:46
Jamie Valenti Jordan
No, they're dramatically different. Some cost ten k and take six months to deploy, some take a year.
31:55
Jamie Valenti Jordan
I would say leave a space for certifications on your package and just get.
32:00
Jamie Valenti Jordan
It out there and let your consumer tell you what they want and then go back and research what the right ingredients are to access that particular certification. If it is indeed an ingredient based.
32:14
Jamie Valenti Jordan
One, if it's something like gluten free certified, well, that's bigger problem.
32:19
Jamie Valenti Jordan
Right? You want to know that sooner rather than later, because you have to choose a facility that doesn't process any sort of gluten product today and is GFCO certified. So I'd say certifications are a sticky wicket just because they are not synonymous with each other. It's not sticking an organic sticker on there will necessarily sell more and it.
32:38
Jamie Valenti Jordan
Will cost you more.
32:40
Jamie Valenti Jordan
Organic. Certified ingredients are more expensive and have to be.
32:45
Daniel Scharff
Yeah, I think from my company, I mean, organic was so core to the identity of the brand that there was no way were going to launch it without the certification. But it took forever. I don't know what's up with organic certifiers, but some of them, I think, just have a cushy little thing going and don't really respond to whether it's the coman that needs them to respond. But I had one unbelievable instance where the Coman was like, yeah, it'll be no problem. And then they couldn't get a response from them for four months from their certifier, and were just twiddling our thumbs. It was unreal. I don't think it would have been an option to launch without it.
33:22
Daniel Scharff
But I really like what you're saying of, yeah, just like, if you can, I mean, something like kosher, which we wanted to do, but honestly, it felt at the end like it could be kind of high risk to do for us and maybe not as important as the organic one. So we kind of held off on that. But I love what you're saying about maybe just leave the space on the packaging and try to bolt it on when you can, rather than waiting to get started. Because I feel like, especially if you're assembling a team and you're paying overhead, get that product out there, because your sales team is going to want six months to try to sell it in, at least before you're even expecting to hit doors and get it actually into the distributor.
33:57
Daniel Scharff
It takes a really long time, even once somebody agrees to bring it on, to get ke or unfi to set it up, place the order, get it there, work through all the kinks.
34:07
Jamie Valenti Jordan
That can take months too well.
34:09
Jamie Valenti Jordan
And one of the things to remember is that at the end of the day, what you launch on day one is not what you're selling. One year later, it is a different product. Every time you launch a product, there's a change that's going to happen to it, either six or twelve months in.
34:26
Jamie Valenti Jordan
Just from looking at the costs and.
34:29
Jamie Valenti Jordan
How things are coming back, the salt level came across a little too heavy. So we need to actually back it off now that we're at industrial scale and yada, yada, there's a lot of different things that kind of change as you scale up. And what you launch it on day one is not going to be what you're selling later.
34:44
Jamie Valenti Jordan
So, okay, lean into that. Right. Let's launch something that's pretty close to done, doesn't have everything we want on it, and let's decide what we're going.
34:53
Jamie Valenti Jordan
To tack on later. It's a much more intelligent way than getting stuck in analysis paralysis and waiting six weeks for the printer to get.
35:01
Jamie Valenti Jordan
Back to update the yada and.
35:03
Jamie Valenti Jordan
All that other stuff.
35:04
Jamie Valenti Jordan
So yeah, I'd say there's a few.
35:07
Jamie Valenti Jordan
Ways to hack commercialization.
35:09
Daniel Scharff
And so I guess from those comments and you've seen it, so you know that the likelihood is near certain that you're going to change something on the formula and or packaging.
35:18
Jamie Valenti Jordan
Right.
35:19
Daniel Scharff
So probably what you would say is if you're ordering packaging also maybe try to go for close to the minimum if you can, knowing that you're going.
35:25
Jamie Valenti Jordan
To need to change it.
35:27
Jamie Valenti Jordan
Yeah, absolutely. I think it's a smart way to do it at the end of the day, just because nobody wants to put that much money out to have something that you're going to have to throw away again later.
35:36
Jamie Valenti Jordan
I mean, that's tough.
35:40
Daniel Scharff
And so let's say you get packaging and they tell you all the stuff that it can do for your product. How are you going to be able to test that? Are you only really going to know once you just do the run or you manufacture it yourself and put it in the packaging and wait and see, or what would you be doing if.
35:55
Jamie Valenti Jordan
It was your own product?
35:57
Jamie Valenti Jordan
Well, so again, there's ways to hack what's called shelf life testing so.
36:04
Jamie Valenti Jordan
You.
36:04
Jamie Valenti Jordan
Can actually work off of, even off your gold standard and your best guess of what your packaging is going to.
36:10
Jamie Valenti Jordan
Look like because you rip something off.
36:11
Jamie Valenti Jordan
A competitor and stick your product inside of it. You can start doing that as early as the point of you building your recipe. It's not going to be terribly useful, but it'll be indicative, right? It means either it's going to go bad in two weeks and you know that you're going to need to deploy things like maybe preservatives or other processing steps in order to make it more stable long term.
36:36
Jamie Valenti Jordan
Or you could do what the large.
36:38
Jamie Valenti Jordan
Brands out there do and just wait till you have something that's running the plant and then stick it in a shelf life accelerator, which is a little cabinet that maintains standard conditions and then hope for the best. They'll go ahead and based off of their own internal knowledge, just label whatever date they want on there and hope for the best.
37:00
Jamie Valenti Jordan
If they have to recall it, they'll recall it. Not a big deal.
37:04
Jamie Valenti Jordan
So I think at the end of.
37:06
Jamie Valenti Jordan
The day, people get hung up on.
37:08
Jamie Valenti Jordan
Trying to get some sort of certified shelf life, things like that. All of those products out there, those shelf lifes are put on there by the brand, not by some scientist in a lab somewhere.
37:21
Jamie Valenti Jordan
Put an intelligent date on there. If you think it's going to be.
37:25
Jamie Valenti Jordan
Six months, have some sort of reason why you think it's going to be.
37:28
Jamie Valenti Jordan
Six months, but go ahead and just.
37:30
Jamie Valenti Jordan
Label it six months, and then if you need to pull it back later.
37:33
Jamie Valenti Jordan
And replace it with fresher product, do that. It's not necessarily the end of the world.
37:39
Jamie Valenti Jordan
So long as you don't have a.
37:40
Jamie Valenti Jordan
Food safety issue going on, that's another way to go ahead.
37:45
Daniel Scharff
I don't think I've ever heard anyone talk as casually as you are about doing some kind of a recall to get rid of product maybe that you discover is not quite lasting. It's very interesting to hear, honestly. I think for me, as a brand, we'd be like, if it's an early brand and we do any kind of a recall, that's going to be like the end of us. But it sounds like from your experience, maybe you're seeing like, no, actually, yeah, you can do that, especially if it's not a food safety issue and you're just saying, hey, product doesn't taste as good as we would like it to, maybe I can just swap this out for product.
38:13
Jamie Valenti Jordan
Is that kind of what you're saying?
38:15
Daniel Scharff
Yeah.
38:16
Jamie Valenti Jordan
I mean, you can always leverage it that way, especially if you find out.
38:20
Jamie Valenti Jordan
That, hey, the date we put it.
38:22
Jamie Valenti Jordan
On it is wrong.
38:23
Jamie Valenti Jordan
I mean, that's Campbell's soup. Does that. We put the wrong date on it. We need to recall it. All right.
38:28
Jamie Valenti Jordan
Why is a small brand any more susceptible to that than a large brand?
38:32
Jamie Valenti Jordan
The only concern is cash.
38:36
Jamie Valenti Jordan
Doing that recall and bringing it back does cost you money. So you need to make sure that as casually as I'm referring it to it. I'm a consultant, it's not my brand. Right. I'm not at risk here.
38:49
Jamie Valenti Jordan
But if you have the cash available.
38:51
Jamie Valenti Jordan
And you can be intelligent about this.
38:53
Jamie Valenti Jordan
You can make pulling product back tactically valuable.
39:02
Jamie Valenti Jordan
Yes. It's a terrible thing to have to.
39:04
Jamie Valenti Jordan
Do a recall because you didn't expect it.
39:09
Daniel Scharff
You mentioned a food shelf life accelerator cabinet also. How does that actually work? Because I know.
39:15
Jamie Valenti Jordan
Yeah.
39:16
Daniel Scharff
You can actually test the shelf life in a fraction of the time that you're saying it's going to last. You don't have to wait the one year or two years and pull it out of the cabinet.
39:24
Jamie Valenti Jordan
How does that work?
39:25
Jamie Valenti Jordan
Well, it depends, because everything depends, right.
39:29
Jamie Valenti Jordan
So the question first is, how does your product fail? If your product fails?
39:34
Jamie Valenti Jordan
Because the packaging breaks down over time in the presence of moisture and oxygen.
39:38
Jamie Valenti Jordan
Great.
39:39
Jamie Valenti Jordan
Increase the moisture and oxygen and the temperature, and it will break down faster.
39:44
Jamie Valenti Jordan
Right.
39:45
Jamie Valenti Jordan
Or let's say that it's oxidation. Well, you can accelerate the rate of oxygen permeation through the wall of your.
39:53
Jamie Valenti Jordan
Packaging, which is really how your oxygen is going to get into your product. You can do that by, again, increasing the temperature.
40:01
Jamie Valenti Jordan
So most of what is done to accelerate is done with what's called q ten. So it's a philosophy of if you increase the temperature by ten degrees higher than what it should be the whole time, it will increase it by some.
40:16
Jamie Valenti Jordan
Number, some fractional multiplier.
40:20
Jamie Valenti Jordan
So one day might equal two days or one month might equal two months of data.
40:26
Jamie Valenti Jordan
Right.
40:26
Jamie Valenti Jordan
So if I can put it into a cabinet and store it at these.
40:29
Jamie Valenti Jordan
Aggressive temperatures and conditions, we might actually.
40:33
Jamie Valenti Jordan
See what's going to happen four months.
40:34
Jamie Valenti Jordan
Down the line by only having it in there for one month.
40:38
Jamie Valenti Jordan
So that's the principle of shelf life acceleration. But the way in which it fails.
40:44
Jamie Valenti Jordan
Determines whether or not you can accelerate it at all.
40:49
Jamie Valenti Jordan
For example, if I want to accelerate.
40:52
Jamie Valenti Jordan
The rate of ice cream decay, I.
40:55
Jamie Valenti Jordan
Can'T just jack it up to 40 degrees fahrenheit and see what happens.
40:59
Jamie Valenti Jordan
Right? It's not the same thing.
41:03
Jamie Valenti Jordan
It happens for fat oxidation and things like that. It happens at different rates. So the point is, at the end.
41:10
Jamie Valenti Jordan
Of the day, that's a good point.
41:12
Jamie Valenti Jordan
To talk to somebody technical, and based on what it is, you can literally just leave it on the shelf in the sunlight. And that would be probably good enough to accelerate in some cases, but you.
41:23
Jamie Valenti Jordan
Need somebody technical to kind of review that for you. Okay.
41:26
Daniel Scharff
And then based on your experience, if you're a food product or a beverage product or whatever examples you want to cite, what are the top things that you see actually causing problems with the product, just so people can have that in their minds. Like, if something's going to make us really have a problem, what's it most.
41:44
Jamie Valenti Jordan
Likely going to be?
41:46
Jamie Valenti Jordan
Oxidation is first, because even a little bit of out of oxidation is really heavy on the nose, and it will.
41:53
Jamie Valenti Jordan
Turn consumers off to your product almost.
41:55
Jamie Valenti Jordan
Immediately if they encounter it. Beyond that, I see people just really skittish around shelf lives.
42:05
Jamie Valenti Jordan
But I do see things like mold.
42:08
Jamie Valenti Jordan
Propping up here and there for refrigerated products. Because honestly, our supply chain doesn't keep it at a constant temperature throughout the entire supply chain. Sometimes people leave things on docks when.
42:19
Jamie Valenti Jordan
They'Re not supposed to, and you don't.
42:21
Jamie Valenti Jordan
Know it until mold shows up in your product, which is a terrible thing to have happen. We see a lot of things drying out. We see when you go up to high elevations, things that have entrained air tend to go flat, like marshmallows. So making marshmallows up at Denver and then shipping them down and vice versa causes them to go flat because they have to go over the rockies. So it's just kind of a weird situation. But yeah, I'd say most of what it is something along those lines are improper sealing.
43:03
Jamie Valenti Jordan
We see a lot of bad seals.
43:07
Jamie Valenti Jordan
To secure products, which can cause anything from product explosion, food safety hazards, to hilarious pictures, to pallet collapse, to a.
43:23
Jamie Valenti Jordan
Lot of pallet collapse, actually, where the.
43:26
Jamie Valenti Jordan
One side of your palette just literally disintegrates and all of your product slides off the side.
43:32
Daniel Scharff
The image in my head is just the beyond sausages. I remember seeing some pretty gnarly photos of those.
43:40
Jamie Valenti Jordan
Absolutely.
43:42
Jamie Valenti Jordan
But anyway, yeah, I'd say for the most part, we don't see things like, let's say, condiment bottles and caps mismatching anymore just because the technical people involved tend to catch that before anybody makes a silly mistake.
44:00
Jamie Valenti Jordan
So anyway, okay.
44:02
Daniel Scharff
And so overall, if you do have a problem like that, it's like oxidation. Typically, that's going to because of a seal, not because of something that happened to an ingredient or problem in the process where somebody made the product.
44:18
Jamie Valenti Jordan
All of the above?
44:20
Daniel Scharff
Yes, all of it. Okay, cool. Perfect. Just everything to worry about, not just one thing.
44:26
Jamie Valenti Jordan
Okay.
44:26
Daniel Scharff
So I think we've covered a lot already of just, here's how you make that product that you've been dreaming of and how you source the ingredients and get the process down. So then next step, actually making it. When we get to that part, there are a lot of options out there. I had the chance actually, just this week to go and spend some time out at a commercial kitchen called amped kitchens. That was really cool to see the kind of like self manufacturer option and how the brands were doing that. And then obviously I visited Coman's as well. I know you also work with people who want to build their own manufacturing kind of right away. So how do you think about all of those different options and kind of the pros and cons of each?
45:12
Jamie Valenti Jordan
Sure. So there's a reason to go with.
45:16
Jamie Valenti Jordan
Self manufacturing, and that is because, one, you like manufacturing, and two, because you don't want to pay someone else their.
45:24
Jamie Valenti Jordan
Margin to make your product.
45:26
Jamie Valenti Jordan
There are lots of other reasons to self manufacture as well. Like something that is truly novel, that can't be built with the existing equipment that's out there, and you need to.
45:34
Jamie Valenti Jordan
Build your own thing, and a few other reasons.
45:38
Jamie Valenti Jordan
But for the most part, if you.
45:39
Jamie Valenti Jordan
Do not love manufacturing, don't do self manufacturing.
45:44
Jamie Valenti Jordan
It is not a skill that you will pick up. This is not something you learn to like.
45:49
Jamie Valenti Jordan
You either like it already or you.
45:51
Jamie Valenti Jordan
Don'T, and most people do not. That said, when you run across the folks who actually understand what self manufacturing is going to look like, meaning running the product day in, day out, it means dealing with scheduling trucks, it means dealing with rain, impacting whether or not your corrugate arrives on time and things like that, and adapting that, and dealing.
46:14
Jamie Valenti Jordan
With people and people issues who are.
46:17
Jamie Valenti Jordan
Running your lines and have personalities all their own.
46:20
Jamie Valenti Jordan
If that doesn't excite you, don't do it.
46:24
Jamie Valenti Jordan
Find a contract manufacturer. All right. There's no shame in going to a contract manufacturer. I send roughly 80% of the people who call me to a contract manufacturer because it's the right fit for their brand. The value in going with a contract manufacturer is you get the economies of.
46:40
Jamie Valenti Jordan
Scale right off the bat.
46:43
Jamie Valenti Jordan
I have a whole diatribe I can go into about how contract manufacturing.
46:49
Jamie Valenti Jordan
Business plans and business models differ substantially from brands.
46:54
Jamie Valenti Jordan
They're not in this to make you money, they're in this to make your product and get paid to do it. They're going to make it as quickly as they possibly can, exactly to your spec, because otherwise it's not your product. They don't get paid anyway, but they're.
47:08
Jamie Valenti Jordan
Going to make your product very specifically.
47:11
Jamie Valenti Jordan
The way you want it, as quickly as possible. And then they're going to close everything.
47:15
Jamie Valenti Jordan
Up, wash it all down, and put.
47:18
Jamie Valenti Jordan
Somebody else's product together.
47:19
Jamie Valenti Jordan
They're not in this to.
47:23
Jamie Valenti Jordan
Make your product day in, day out. They're just going to make your product to the point that you order it and then move on, knowing that they.
47:30
Jamie Valenti Jordan
Are differently incentivized than I think a lot of brands recognize, at least from my experience, and that is that they're.
47:39
Jamie Valenti Jordan
Not there to insert money, take away product.
47:42
Jamie Valenti Jordan
They are a partner.
47:43
Jamie Valenti Jordan
They want to know how to make your product more efficiently. They're going to want you to come into their facility. They're going to want you to learn about how they want to put it together and make sure it's being done right. If it's not done right, nobody cares. Right. This is a bad relationship. So at the end of the day.
47:59
Jamie Valenti Jordan
We try to kind of teach people.
48:03
Jamie Valenti Jordan
Both commands and brands how each other works and why each of their models don't necessarily overlap with the other. I think one of the big concerns, the big myths around contract manufacturers is that they're going to steal your product. There are so many reasons why they.
48:19
Jamie Valenti Jordan
Don'T want to steal your product.
48:20
Jamie Valenti Jordan
The first is it's not their business model. Their business model is to make product and then move on to somebody else's product. They don't have the time or the resources to go sell it.
48:29
Jamie Valenti Jordan
They're not interested in selling it. They don't have a brand to sell it under. They're really not interested in taking your.
48:35
Jamie Valenti Jordan
Product and doing anything with it because they don't have the time to. Every minute that they're not running their production line, they're losing money because they have to pay the people that are there whether they're making something or not. So they would rather be making something so they have money to pay those.
48:50
Jamie Valenti Jordan
People at the end of it. That's really what it comes down to. And so I think there's this big.
48:57
Jamie Valenti Jordan
Myth that you give off quality when.
48:59
Jamie Valenti Jordan
You work with a coman.
49:01
Jamie Valenti Jordan
Not if you write your spec correctly. Same thing is true of, hey, they're.
49:05
Jamie Valenti Jordan
Going to steal my product. They have no interest in doing that.
49:11
Daniel Scharff
In terms of how they cost you. I've seen you break this down before, but basically, pretty simple. They're just going to figure out, right, how much it's going to cost for them to make it. They're going to look at the labor and all the stuff that they have to do and then they're going to add their margin on top of that, and that's the price that they're going to charge you.
49:26
Jamie Valenti Jordan
Is that a fair summary? Yeah.
49:29
Jamie Valenti Jordan
So it's direct labor and direct labor. It's the amortization of the equipment that they have to run your product. It's the amortization of the facility that they have to run your product. It's the maintenance of that equipment. They kind of absorb their own maintenance of the facility and their property taxes and things like that.
49:49
Jamie Valenti Jordan
And they've got utilities.
49:50
Jamie Valenti Jordan
The utilities really don't factor in that much most of the time. And then they do have a margin they add on top. So the way to think about this calculus is if they can make, let's say 10,000 units in a shift, you always want to think about how much.
50:03
Jamie Valenti Jordan
Can they make in a shift, right?
50:05
Jamie Valenti Jordan
So if they can make 10,000 units.
50:06
Jamie Valenti Jordan
In a shift and they can do.
50:09
Jamie Valenti Jordan
That, and then they can go off.
50:11
Jamie Valenti Jordan
And do something else, then you're paying.
50:13
Jamie Valenti Jordan
For one shift of all of those costs in order to make your 10,000 units. If you instead design a small line for yourself that makes 10,000 units in.
50:22
Jamie Valenti Jordan
A month, you are paying all of those costs associated with that for 20.
50:30
Jamie Valenti Jordan
Days of operation instead of one.
50:34
Jamie Valenti Jordan
It's not one to one and everything.
50:36
Jamie Valenti Jordan
Like that because you're running more often and things like that, you can offset.
50:40
Jamie Valenti Jordan
It with more days.
50:41
Jamie Valenti Jordan
But at the end of the day, when you run the math, it usually makes more sense to go with a larger economy of scale and run less.
50:49
Jamie Valenti Jordan
Frequently than it is to go with a smaller system and run every day.
50:56
Daniel Scharff
Okay, makes sense. And I know I've seen you work with people to even negotiate with them, where I think your goal was to get it to be as kind of open books as possible, where instead of them just saying, hey, it's going to be forty cents a unit or whatever, actually like, okay, break this out for me. Show me each of those individual pieces so that I can negotiate on each one of them or help or maybe work with you to figure out how we can be more efficient. Have you seen good results with that? What do you typically tell brands to do?
51:25
Jamie Valenti Jordan
Incredibly good results. So I would say, rather than say, hey, give me all of your costs for all of these different buckets. Instead say, I'm less interested in paying a per unit cost where you get paid $0.40 if you make 5000 units or you get paid forty cents per unit if you make 15,000 units in a particular shift. Let's instead look at how much of.
51:47
Jamie Valenti Jordan
Your actual costs are coming from each shift, right?
51:52
Jamie Valenti Jordan
Because those are agnostic from how much is produced. And then it's on me to figure out how to increase the number of units that you make so that it's necessarily cheaper.
52:01
Jamie Valenti Jordan
To me at the end of the.
52:02
Jamie Valenti Jordan
Day, you want to cover all your costs and make a profit. I can guarantee you cover all your.
52:06
Jamie Valenti Jordan
Costs and you make a profit. And how much we make together on.
52:11
Jamie Valenti Jordan
This line is the thing that's variable.
52:13
Jamie Valenti Jordan
That'S going to decide my unit cost.
52:17
Jamie Valenti Jordan
From a Cogs perspective, what I sell.
52:19
Jamie Valenti Jordan
It for, none of your business. Right. But I can go through and actually.
52:23
Jamie Valenti Jordan
Make a CoGs model that is dependent upon efficiency driving down the costs.
52:31
Daniel Scharff
So more of a shift based approach rather than a unit based, and then on you to try to help them get more out of that shift.
52:38
Jamie Valenti Jordan
In reality, that's how they're absorbing their own costs anyway.
52:41
Jamie Valenti Jordan
Right.
52:42
Jamie Valenti Jordan
It's how they actually plot their own costs is on a shift basis.
52:47
Jamie Valenti Jordan
Yeah.
52:47
Daniel Scharff
Mainly their cost is going to be fixed for the shift, not variable by the unit.
52:52
Jamie Valenti Jordan
That's right, exactly.
52:53
Jamie Valenti Jordan
And so the only reason they're giving you a fixed cost per unit is because they see where they can make more money by being more efficient on your product.
53:01
Jamie Valenti Jordan
That's so interesting.
53:02
Daniel Scharff
Honestly, I never thought about it that way. Okay. And then just quickly, on the option of self manufacturing, let's say some brands are thinking like, man, I can't even get a coman interested at the scale that I'm trying to start with and I want to start testing. Are there scenarios then where you would say, yeah, actually you could think about a commercial kitchen to get started, or maybe you want to test that out for a year and tweak your formula. Who would you think could be a.
53:29
Jamie Valenti Jordan
Good fit for that?
53:31
Jamie Valenti Jordan
Yeah, I mean, I think commercial kitchens are a great place to start. It's where you really find out if you like manufacturing or not, to know whether or not you should be self manufacturing. So I do recommend people generally start there, unless that just makes absolutely no sense.
53:47
Jamie Valenti Jordan
In a commercial kitchen, you are very.
53:49
Jamie Valenti Jordan
Unlikely to make any real money.
53:52
Jamie Valenti Jordan
But that's usually not the point, right?
53:54
Jamie Valenti Jordan
It's the business building. You're building your product, you're getting feedback from consumers and from buyers and things like that about how you can improve your product before you make this huge leap in putting all of your money into inventory and hoping you can convert it back into cash. So commercial kitchens are incredibly valuable. There are the generally accessible versions of what we have in large industrial pilot plants and commercial.
54:23
Jamie Valenti Jordan
Kitchens look very similar, some unique equipment.
54:26
Jamie Valenti Jordan
Here and there, but at the end of the day, those are very valuable to learn against and learn on. And so, yeah, I think folks like amp kitchens are wonderful for that.
54:38
Jamie Valenti Jordan
I have good partners with Amp kitchens and, like, what they're doing down there. Awesome.
54:44
Daniel Scharff
I love to see it. Yeah, it's very cool tour the facility and just see what kind of businesses we're actually manufacturing out of there and like, yeah, I mean, it looks like you think it looks like there's a room for each brand and then they're in there making product. They're doing what you think they're doing, and they're doing it in a sanitary way. They've got their process and they're just churning stuff out. Definitely not like a test kitchen where they're just trying to tweak their formula, like. No. Yeah, they're churning stuff out, their trucks coming and picking up product. Yeah. Pretty cool to see. I almost think about it. It's not like you're probably not making much money in the early days, but you're also, I mean, with a coman in the early days, you're not making much money either.
55:29
Daniel Scharff
Probably it's more like, how much are you and what's the risk based on.
55:33
Jamie Valenti Jordan
The minimums that you have to meet? Yeah, absolutely.
55:37
Jamie Valenti Jordan
I think at the end of the.
55:38
Jamie Valenti Jordan
Day, it is hard to be small in the mass market area of food and beverage.
55:46
Jamie Valenti Jordan
I don't know about other cpgs in health and beauty and things like that, but in food and beverage, it's very hard to be small. There's not a path to profitability that doesn't involve scaling. To be perfectly honest, somewhere, some way, you're going to lose money until you get up to a certain scale. Plotting that, knowing how to get to that point and making sure you have enough money to get there requires a very strong tactical business leader.
56:16
Jamie Valenti Jordan
So I'd say make sure you've got.
56:18
Jamie Valenti Jordan
One of those on your team.
56:20
Daniel Scharff
And a really important piece of this also is planning how much inventory you need at the beginning. Right. And a lot of people who have done this a bunch of times have a general sense. If they have strong relationships with retailers, they know we're going to take it in, or maybe they presold it. But more often you're just going to have a lot of uncertainty. Right. And you're just trying to figure probably more like, can I sell as much as I need to make if I do a minimum order quantity? With the coman, I know you and I have been in some situations together trying to figure out the right forecasting, even way back to our early days. And sometimes you have sales and you're like, you guys got to be kidding yourselves.
56:57
Daniel Scharff
There's no way they're like, no, we're going to sell this much and we need to have the inventory. We better have it there to sell it. And then I personally have been on the expiry inventory channels also dumping a bunch of stuff that otherwise you would have to pay to throw out. So what do you advise for early brands in terms of their early forecasting? Maybe before they've even done their first run.
57:24
Jamie Valenti Jordan
I would honestly recommend that folks, buy more than you think you need. As long as you've got the shelf life for it. Just do that.
57:38
Jamie Valenti Jordan
It's so much easier.
57:42
Jamie Valenti Jordan
It is so much easier to have product on hand and not have to.
57:45
Jamie Valenti Jordan
Worry about production than it is to.
57:49
Jamie Valenti Jordan
Constantly trying to figure out how to schedule the next run with the command who doesn't want to do something below their moq? There's reasons and times and places for doing something below someone's moq and it can be requested and asked for and things like that. You'll pay through the nose for it, but there's reasons to do that.
58:07
Jamie Valenti Jordan
Sometimes I'd much rather see somebody spend.
58:12
Jamie Valenti Jordan
One or two more months trying to get a little bit more shelf life on their product and then make a much larger production run and hope for the best. I know it's a long sales cycle.
58:23
Jamie Valenti Jordan
But having more material on hand to.
58:26
Jamie Valenti Jordan
Go sell means you don't have to keep cycling back to production, diverting yourself away from sales at the point where it's the most meaningful.
58:33
Jamie Valenti Jordan
So for a lot of people that means larger runs, less frequent, and being.
58:41
Jamie Valenti Jordan
Clear and transparent with your coman about that strategy.
58:43
Jamie Valenti Jordan
I think trying to deceive them into.
58:46
Jamie Valenti Jordan
Something else, or even worse, a lack of planning to deceive yourself into thinking it's going to be something else is.
58:55
Jamie Valenti Jordan
Detrimental to all parties involved.
58:57
Daniel Scharff
Yeah man, it's always a challenge because you've got like the salesperson and the key thing they're trying to do is sell the product and being out of inventory and out of stock can kill the brand or relationship with a specific retailer, whereas you have the CFO or the COO and I mean, they really are trying to figure out how to keep the cost down, right, and the working capital and all of that kind of stuff. And then there's always that like, man, fresh is the best. You can make the product and it's not going to hit its shelf life, but when it comes off the line it tastes amazing. Like the best version above the gold standard, the platinum standard, and then it sits for a while and then it's.
59:39
Jamie Valenti Jordan
Not quite as good as that first.
59:41
Daniel Scharff
Freshy fresh. So you're always yearning for the fresh batches to get those out into market to make your best impression possibly possible with buyers, with consumers. So it is a tough challenge. And having been on the sales side, I don't know, I really believe in actually doing a bottoms up view on it. Just like, okay, next 90 days, who do I know that's going to actually order? And what could that look like? And then have some safety stock on top of that. But yeah, running out of product will definitely give you a heart attack. As much as worrying about if you.
01:00:16
Jamie Valenti Jordan
Have a product quality issue.
01:00:20
Jamie Valenti Jordan
The only.
01:00:20
Jamie Valenti Jordan
Other worse thing than running out of product is running out of cash. It's hard to balance everything. How much money do you put into inventory? And then you have to wait for it to come back. I mean, honestly, I would plan on having 180 days worth of cash to make inventory available before you really get started. So whatever you think you're going to sell in 180 days, you don't need.
01:00:45
Jamie Valenti Jordan
To print all of it into inventory immediately.
01:00:48
Jamie Valenti Jordan
But having that cash available means that.
01:00:51
Jamie Valenti Jordan
You'Re less worried about.
01:00:52
Jamie Valenti Jordan
You don't have to go back to fundraising in the middle of trying to sell.
01:00:56
Daniel Scharff
And there are a lot of funding options out there. Probably only once brands get a little bit bigger, but any of those that you think are pretty good options, there's like factoring, like purchase order financing and working capital financing. Like anything that you like to recommend for early brands.
01:01:13
Jamie Valenti Jordan
Yeah, I do like.
01:01:17
Jamie Valenti Jordan
Purchase order and.
01:01:19
Jamie Valenti Jordan
Like you said, inventory financing, things like that. There's all sorts of short term products out there. Your local bank will not know all of them. You'll need to get into somebody who knows this area specifically. There are a whole host of groups.
01:01:36
Jamie Valenti Jordan
Out there that do this. Some of them are predatory, but most are not.
01:01:42
Jamie Valenti Jordan
Most are fine so long as they get their money back with the interest that you promised them. Even if it's off a couple of days of when you said it was going to be back, they're not really that upset about it because they got.
01:01:52
Jamie Valenti Jordan
Their money on the interest of one thought.
01:01:58
Jamie Valenti Jordan
I prefer those to trying to sell off equity just to have money to put into inventory. I've seen a lot of people try to do that and it doesn't work. There's not a lot of groups out there willing to invest and own equity when you don't have the money to.
01:02:13
Jamie Valenti Jordan
Put into the inventory. So I don't know. That's kind of my perspective on it.
01:02:22
Daniel Scharff
And here you mentioned equity. I know you get this question all the time. Brands are like, hey, I have a good idea. What if I gave my Coman some equity and then maybe they wouldn't charge me so much for the product. Yeah. So anyone just listening can't see the grimace on Jamie's face, even just hearing, I mean, I think you've answered this before. My impression is like, great, if you give the coman equity, they're going to say, thank you very much, and then they're still going to build a model that covers their costs and puts their margin on top of it.
01:02:47
Jamie Valenti Jordan
Is that about right?
01:02:48
Jamie Valenti Jordan
That's exactly right. That's exactly how that works. Because the equity means nothing to them. It's not part of their business model. Your performance and your ability to sell is not something they can stake their business on.
01:02:59
Jamie Valenti Jordan
So whatever you put out there, they're.
01:03:02
Jamie Valenti Jordan
Still going to cover their costs, and they're still going to make a margin on top of that.
01:03:06
Jamie Valenti Jordan
And if they get a windfall in seven years, great.
01:03:10
Jamie Valenti Jordan
But in reality, you're not going to be with that command for more than two or three years anyway. The reality is most coman relationships, especially with small groups, they don't last more than three years ever.
01:03:21
Jamie Valenti Jordan
Either you die or you outgrow them. And yes, there's value in having multiple.
01:03:27
Jamie Valenti Jordan
Commands, but in reality, they're so much smaller than your next command that it just makes more sense to move up to the next coman.
01:03:36
Jamie Valenti Jordan
I think for a lot of folks, giving equity to your coman is not valuable because they don't value it, and.
01:03:47
Jamie Valenti Jordan
They don't see it as a way of continuously investing in your business.
01:03:50
Jamie Valenti Jordan
Over time. They see it as a trade off.
01:03:53
Jamie Valenti Jordan
As a placeholder until they get a windfall.