Full Transcript

 

Sari
Welcome to your Food Business Success. This podcast is for early stage entrepreneurs in the package food industry ready to finally turn that delicious idea into reality. I'm your host Sari Kimbell. I have guided hundreds of food brand founders to success as an industry expert and business coach, and it's got to be fun. In this podcast, I share with you mindset tools to become a true entrepreneur and run your business like a boss, interviews with industry experts to help you understand the business you are actually in, and food founder journey so you can learn what worked and didn't work and not feel so alone in your own journey. Now, let's jump in!

Sari
Welcome everybody back to the podcast. You guys are in for a real treat today. Today, I welcome Tim Bradley of Teatulia, and let me give you the quick bio here. He is the CEO of Teatulia. Has more than three decades of experience in marketing, sales and general management for CPG, otherwise consumer packaged good companies including Procter and Gamble, Smith, Kline Beecham, Open Road Snacks and Rich Products. He's an entrepreneur at heart who has built a half dozen businesses, often from the ground up to significant annual sales levels across multiple industries. Tim grew up on the East Coast and earned an economics degree from Hamilton College. I love that. I didn't know that. When he's not in the office, Tim is likely out enjoying the mountains, often with his loyal sidekick Tofur, the chocolate lab. There he is. That's him in the video. I love it. Welcome Tim. So great to have you here!

Tim
It's great to be here. Thanks, Sari. I appreciate it.

Sari
Yes, you're a fan, but I have to say I'm just like, I have to tell him this. I've never I have a little bit of a business crush on you.

Tim
Oh, really?

Sari
Don't worry, Karen doesn't need to get upset. When we start talking business, or when I hear you talking business to other people, I just like, oh, so I can just listen to you all day, but we are going to have a conversation, even though I could just call this the Tim Show.

Tim
I appreciate you saying that. Thank you very much. The feeling is mutual.

Sari
I don't know, I was really nervous to ask you to come on the podcast. I'm like, he's got a big job. He doesn't have time for this, but I finally got up the courage. So, all right, I want to go in the way. We'll start with the way back machine. So we'll talk more about Teatulia towards the end here. But the Austin Powers Wayback Machine, tell us about when you first started a business.

Tim
My very first business was actually a painting company.

Sari
I didn't know that. Well, then let's maybe I'll be specific. Let's talk about your first CPG business.

Tim
Well, I'm going to go for intrapreneurial, rather than entrepreneurial first. Okay, I was working for Rich Products, which is about a $2 billion now, food business headquartered in Buffalo, New York. And I got in this position where Rich Products at the time didn't have a warehouse club business, and warehouse clubs were pretty new still, you know, addition to Sam's and Costco and BJs, as we all know, there were other pledging. So we started, a colleague of mine and I started, you know, we pitched it to management, hey, this is what we would need to start a warehouse club business. We did and we grew that from 0 to 16 million in one year. And so they were pretty happy with that. And led to other opportunities, you know, I actually ended up creating two or three more divisions within Rich Products. I would say that, you know, the very first one and we're going to talk about this, the very first one that we, you know, sort of started and ran, sort of entrepreneurially, not intra really was the Rocky Mountain popcorn, which became open road stints.

Sari
Okay, amazing. Yes, so I love this. I actually probably don't even know the whole story. I just know like bits and pieces of it. So tell me why you got into popcorn, how this came about, and a little bit more about the launch and growth of it.

Tim
Well, usually I start with because I temporarily lost my mind. I was coming off of, you know, so at the time, I had been married for 15 years to my lovely wife, Karen, who is an accomplished CPG exec, you know, in her own right. But at the time, she had taken some time off, and she was being a full time mom, which is great, because we have two fantastic grown children who are our contribution to the world. So she had taken a little time off, and I was coming off of a job in telecom, believe it or not, I was seal of a telecom company. And that came to a natural conclusion when, you know, some investors came in and decided that they wanted the entire business, and they didn't need, you know, the executive, you know, the C suite came off of that, and, you know, I had a pretty nice little severance deal, and I started talking about, like, what I'm going to do. I did a little bit of consulting, sort of general sort of management consulting in the interim. But my wife and said, you know, I've always wanted to do my own business, maybe after the next job, or after the next job, after that, we'll do it. And she looked at me without hesitating, and said, what the hell you waiting for?

Sari
Do it now.

Tim
So a week later, I find myself meeting with a friend who is a lawyer who specialized in small business acquisitions, asking him, what does this process look look like? And six months later, after vetting, you know, a bunch of businesses ranging from, you know, office furniture to a lot of other things. We ended up buying a very small business called Rocky Mountain popcorn. And the reason that we fell in love with that business wasn't because it had a lot of revenue. It had sub 300,000 in revenue. It had some revenue, had some distribution, but we love the product, and we thought we can work with this. And had a long way to go in a lot of areas. In fact, at the time, didn't have any idea how far it had to go. And Karen came.

Sari
I have a little bit of denial.

Tim
If you are to start or acquire a small business, you are going to get a lot of surprises. And I can give you a long list of the surprises that we got, but that's probably for another whole day. In any case, so just to sort of give you the sort of the arc of the story, we ran the business 10 years. We grew from that, you know, sub 300,000 to over 6 million along the way. We, you know, Rocky Mountain Popcorn remained our flagship product. We actually morphed the company into road snacks to reflect that we were launching, you know, potato chips and beef jerky and other, you know, snack lines along the way. But it was 10 great years. Sometimes, you know, edge of the seat white knuckling, and sometimes these, you know, these fantastic wins. And we know we really enjoyed it. And I'm happy to say, as you know, Sari, our marriage did survive.

Sari
We're going to get into working with your spouse. But what was like, I mean, what would, I'm sure there's many, but what was something that comes to mind as far as, like, a challenge of scaling, because that's where a lot of my people are. You know, everyone I work with is sub 300 I say, like, we're going to get you to 300 and build that nice base of a platform, but you got to have that, and then you can scale up. But like, what was one of the big challenges going from?

Tim
I think the central challenge that every startup brand faces, and that is that in order to get distribution, the best way is to have distribution, you know, and that seems like a conundrum. That's because it's a conundrum. And so, you know we had very little distribution when we started, and we just, literally just knocked on doors until our knuckles were bleeding, trying to get some distribution. And we did. We got, you know, eventually, we decided that we would be able to best innovate into the convenience store market, we had a snack, right? And people snack in convenience stores. And the convenience store world, it looks like sort of a black box to those from the outside, and it was to us, too, but we dove in and try to sort of figured how to work, and who are the distributors, who were the main customers, who made the decisions, what was valuable to the to the consumer, looking for a quick, convenient snack. And we started to, you know, to innovate into those, you know, into and against those problems that we identified, and one step at a time. And eventually we got some distribution here and there and little ones. And, you know, we were doing things like delivering product or UPS. Eventually we got into some distributors and caught a really big break, when, actually, Karen, that's my that's my wife, in a sales role, was able to get a big hit at a major national truck stop chain called Pilot. And it was a game changer from us, we literally, you know, going from literally, I could show you the sales curve on a graph, and, you know, it just sort of goes like this. This is the day we got Pilot. And then it went like that, yeah. And it wasn't just because of Pilot, it was because Pilot force distribution in McLean. And, you know, we, you know, we, with a lot of, sort of hard work, figure out who complains other customers. Hey, we're in distribution. Here's our story, and here's why this is, you know, is an innovation in this particular section, in the snack aisle. You know, take us on and we we started just sort of racking up win after win. But I wish I could tell you there was a formula for getting past that conundrum, right? The cloud distribution. And I want distribution, I have distribution. That's a conundrum. There's not a like, I wish there were a formula. There is a formula.

Sari
You just kept knocking on doors, right?

Tim
Exactly. I mean, the another formula would be, you know, have your rich uncle give you 25 million bucks and just buy your way. But that wasn't an option for us. So the formula ends up being, yeah, knock on doors until and by the way, and I also tell this to young entrepreneurs as well, and that is, you need to do two things when you do knock on that door and they do say, yes, even if it's a one store, right? Two things, you need to service the heck out of that store and keep them happy and you need to show up. You need to be there. You need to, like, just make sure that there is no excuse for them. You know, not being happy, but more, almost, more importantly than that, you need to find a way to get to your consumers and solicit and then listen hard to their feedback. And when your customers speak. You need to just think of that as like an Oracle, and listen to it and act on it. Now you're going to get a lot of weird, you know, one offs from customers. I don't mean that I was like, I need a pink nail polish. No, I don't. But what I do need is, I need some honest feedback. And we made a lot of improvements based on that feedback, and it helped us grow and really kind of take off from there.

Sari
Yeah, I bet the product you started with was not what you ended up with. Things changed.

Tim
It's funny because one of the things that attracts us to visit, they had a previous house, they had a really great caramel popcorn. It was fairly unique in the way it was made, and it was actually fabulous. But the one that I fell in love with was a jalapeno white cheddar popcorn. And just, it's funny, because just the other day, I bumped into someone and said, hey, you're that Rocky Mountain popcorn guy, aren't you? I said, yeah. He said, what happened to that jalapeno white chedar popcorn? That stuff was so good I can't get it anymore. I'm like, yeah, well, that's a story for another day, but not available anymore. Sorry. Mostly what we did was we expanded on, we did what everyone should do. We based on sales and customer feedback, we culled some items out of the line, and then we innovated into, you know, into the line. We ended up with a, you know, a churro popcorn, which is like brown sugar and cinnamon. And even though it doesn't sound so good, we ended up with a Southwest red chili popcorn. We ended up with these sort of and again, we thought these would play well into the market that we were playing in.

Sari
Unique flavors beyond what is already in the C suite stores. C suite being the fancy industry word for convenience store or C stores. That's C stores. Yeah, convenience stores. A couple of things I heard that I want to like, interpret here are you guys chose a strategy and you constrained. You weren't trying. Now, this is pre like Amazon and e commerce and stuff like that. But what I heard from there is like, we decided to go convenience stores and like, that's what we did. We like, really focused, and we thought about packaging and flavors and everything, messaging, everything for that particular customer, which is really key, because what I see a lot of times is people are like, and now there's so many more options too, right? Like, I'm going to go e commerce and I'm going to go farmers market, and I'm going to go food service, and I'm going to go convenience stores and I'm going to go grocery stores. And you just cannot do it all at once.

Tim
Focus, focus, focus, and it's so hard, because you see these little opportunities. I was just talking to someone the other day about in business, and they were in this one area, and they said, and then we're going to innovate, and we're going to, you know, do small individual packages of this product to consumers online. And I said to this person, I said, just stop right there, right? I'm going to give you the toughest love that you ever gotten. Don't do that. Do not do that is that you need, you have not even really begun to tap this market. You know that isn't small individual packages to consumers. It is something else, and that thing has so much potential, you need to figure out what you can do to be successful in that area, and put this dream of like, because I think I can be successful on Amazon. Well, it's a lot harder than it looks, Bro.

Sari
You don't just throw your stuff up on Amazon like each channel requires significant resources of time and energy and money. And I think what happens is people just go a little bit with all of them, and they don't actually, really see it all the way to the end. And you are the King of Constraint. You're like, no, no, do not do that. You are not ready to introduce flavors or new sizes or new products.

Tim
It takes more than what you said. It takes experience. It takes knowledge of the class of trade. It takes everyone wants to believe that, that you can click your way to business. But business is still about relationships. It takes relationships within that you know, within that focus channel that you take build those relationships get known in that channel and build your knowledge and be successful in that channel. If you wake up one day and you say, I can't be successful in this channel, then I've got 10 questions for you, and none of them are what should you do beside that? They're all you know, how do we get out, why? It's not being successful to the extent that you want in that channel.

Sari
And we'll talk about Teatulia and Pivot that you guys made here in a minute. But you don't change course lightly, and you do it with a lot of strategy. And I love that word. You know, you are a CEO. And one of the things I talk to people a lot about is becoming the CEO of their business. And my next level program Master Your Business will be open shortly, and it's all about becoming the CEO. So we are talking to a legit big, you're kind of big time, even though you're very humble. I mean, that's I think one of the biggest qualities of CEO is to say, this is the strategy, this is the path, and we're going to see it all the way to the end. And we will only change course.

Tim
I'll just flip on that. It is very difficult, you know, to be the CEO and the person who's taping boxes to get out the, you know, the Amazon orders at the end of the night. And I've done both. And you have to do both simultaneously. And you have to say, you know, almost break down your day. You don't get to break down your day very well, but you you need to mentally break down your day. I'm going to execute, I'm going to get what I need to get done, and then I'm going to spend some money where I step back and close the door, turn off the lights, whatever you need to do, step back and really think about, analyze, pull the data, really try to figure out, you know, like what's going on. And maybe that's not every day, maybe CEO hat.

Tim
Have a hat. This is not my CEO hat. This is my dog hat, but I have a CEO hat. But the other thing is that find and snuggle up to if you can, smart people who have been there done that you. And can offer that outside perspective. Because the other thing that's very difficult as you're, you know, taping those boxes is to kind of pull back and have that perspective. But also you may not have that experience where, if you find someone that does you know, and you can very honestly tell them what's going on, that person can often turn around and say, have you thought about X and you hadn't thought about X, right? So find someone really smart and someone really experienced and put them on your advisory board and listen.

Sari
I love that. I want to do a podcast called Your Advisory Board who all needs to be on, so that'll be coming up. All right, let's switch gears. Because, I mean, we could just do a whole episode alone on Rocky Mountain popcorn, but you sold that business, right? And let's talk very quickly about working with your spouse. Because what I've gotten that like, I have a lot of people who do start businesses with their spouse to some level of engagement. You know, some are like, 50-50, some are more. You know, there's like a main person, but they're being supported, and it's still a joint venture. So it's not easy, but you did it. You guys are still married, and then you work together again, so you must have done something right. So what can you tell us about starting a business with your spouse?

Tim
And we still hold hands at the movie theater. So it's even better. What I can tell you is that the first thing I'll tell you, it may be a little bit controversial, and that is, it isn't for everyone, not everyone has a kind of relationship that, you know, that can withstand the pressures of, you know, of operating a business, because the pressure is tremendous. And so you have to have a rock solid relationship. Number one. Number two, I think that it's important that you each bring something to it, okay, and like, if I think about my, you know, my 15 closest friends. And I stand back and say, who would be successful at, you know, running a business to these couple, they're all couples who would be successful, you know, out of the 15, right? I would be very lucky to identify one. Now I know that, and I also know because, because we've done it. And, you know, like attracts like that there are many people out there who run, you know, very successful businesses, spouses. I admire them, but I can tell you that it's kind of a 1% thing, like, not in terms of wealth, but just in terms of, like, who's like, suited to do this, and then it'd be helpful to have some sort of rules of thumb. And I'll kind of tick down some of the most top of mind come from me. And one the most important thing is always delineate who's doing what. You can't both do it all. And by the way, it doesn't have to be forever delineation. Karen and I changed that delineation, not intentionally, but just naturally. We changed that delineation probably every, at least every couple years, maybe more often. You know, if there were some times where I'd be running marketing and Karen would be doing sales, and there's times when I'd be doing managing sale, the sales department, and she'd be doing marketing, I pretty much consistently did operations and finance. But you like, you need to talk about it and be open and like, understand, like, okay? And when there's a change, be clear about and communicate with the rest organization. Okay, from this day forward, we're going to make a change, and this is just as any business would do, but because you're, you know, because you're married or your partners, you don't always do that, right? You got to be like, okay, group, bring it in. Here's what we're going to do. We're going to change. And now Karen's going to be doing this, and I'm going to be doing that. And so that your organization understands, because they see you as a blob, you're a married blob. They don't necessarily distinguish between you. So you have to do that distinction for them. So number one, always delineate. You know, who's got what. Number two, be clear about how decisions are made, and what decisions are made and when, and what are the rules around making decisions. And just in our case, we had, you know, key decisions, strategic decisions. Product decisions. Those were, those had to be mutual. And they had to be, we had to be unanimous about those. And we all the way down to, you know, how much money could you cut a PO for without talking to, you know, the other one, right? So, and everything in between. So just be really clear about that. And then third one's a little bit of a lifestyle thing, and I will tell you, we were the first ones to violate this and we did so often, to the extent that our kids would sometimes look at us and and our kids, by the way, were in elementary school when we started, and we're high school when we were, you know, they were out of high school when we were done. But the most common plea from our children at that point, was, Mom, Dad, can you please stop talking about work? And it brings home the hope to this rule, which is you got to turn it off. You have to have your own things outside the business. Like each of you have your own things. You have to have common you know, if you have a family, family things or couple things outside the business, and you have to have like, this is we're not talking about work now. When you go to bed at night, like, stop. It's an obvious one, but we had many, many, many moments where we just kind of looked at each other and said, hey, let's write this down and talk about it tomorrow in the office so that we can, you know, enjoy our bottle of red wine and Austin, you know, whatever.

Sari
Yeah, it's so tough because you're just in the moment and you're just like, I have this idea, and it's fun. But when you look over the long term of the health of the relationship, you start to see like, yeah, the enjoyment and the fun and the thing, you know, it just becomes all about work and over the long term, that can be really challenging for a relationship, when it just becomes about one thing. So staying multi dimensional. It's a practice, and it does. It takes, like, no, no, we're not talking about this now. Write it down. We'll come back to it when we're both in the office. And yeah, I mean, I preach that whether you're in married or not, I mean any kind of partnership, having very clear roles. And you know, I do teach in Master Your Business like one person still needs to be the CEO. That doesn't mean they're going to make all the decisions, but there does have to be somebody that, like, the buck stops here and they're willing to take on that responsibility. But both people are, like, just making decisions, and you can, you know, have conversations about, what kind of decisions do we make together, versus we've created a vision and a strategy, and I trust you to go execute those things that you're good at, that we've already decided that you're going to do.

Tim
That is absolutely 100% true, because on one side, if you have one person making decisions without sort of the, you know, the agreement of the other, I think you can imagine, obviously, the problems that are going to arise. But on the other side, you know, if one of us ran across the office to the other one and asked about every single thing that we possibly did, then we would never have gotten anywhere. So that's why you have to have this structure.

Sari
And just like in a marriage or any friendship or something like that person may not do it the way that you would do it, right? Like you may not load the dishwasher. Like Karen would like you to load the dishwasher, but do you get it done? Yes, right? And so giving each other the freedom like, I think that's where the biggest strife comes in, when everybody each other has an opinion about how you should do it, instead of saying, here's the result we want to create, and here's some ideas of how we could get there, but then you be you. You do your way, and go get it done. And I'm here to talk about ideas and all of that, but I'm not going to, I think there can be a lot of criticism and resentment that.

Tim
And by the way, sober is another thing that's really important. What you just said is tremendously important, and the way that that comes out is to have sort of clear and measurable goals and milestones. Say we're going to do this. We're not going to say how we're going to do this. If we want to brainstorm around that, that's fine, but we're going to say, this is going to be the result, and this is when we're going to measure it. And it can be awkward as a couple, it's tremendously awkward to say, okay, well, it's the end of the quarter. How'd you do on that goal of getting, you know, 100 new stores? And, you know, because it like that accountability has, you know, a dynamic in your personal, like couple relationship, or even your business partner relationship, that you just have to get over. You have to acknowledge that we've got these goals. We're going to hit some, we're going to not, and how you react to it, especially the not hit it, is really important, but that's another topic. The main point is you have to understand what it is you're trying to accomplish. And to your point, don't focus on how that other partner is going to accomplish what they're going to accomplish. Focus on this is when we're going to measure it, and this is what we expect, and at that time, if you've fallen short, the conversation isn't, well, you're an idiot. You should have made it. The conversation is, let's talk about why. Let's talk about what we need to do. Do we need to change the goal? Do we need to change the strategy? Do we need to change the tactic? Do we need to, you know, put more resources on? What's going on? Because you lived it, you are the one who is in it. You would know best, you know, and be honest with each other here, be you know best to like how it is that we do want to accomplish, or are we focused on the wrong thing we need to change.

Sari
Right. It's like, okay, you go write the emails, you go do your thing, you post on social media. But like, what happens is, like, let's say you're like, micromanaging Karen. You're like, you shouldn't have said it that way, or I wouldn't have separated in that email that way, or I wouldn't have done that. And like, you got your own job to do. So I think it's about creating that trust and those boundaries and saying, here's where I need input, and here's where I don't and I trust you. And like, we're both working for the same goal, and the outcomes really clear what we're trying.

Tim
And I was just in addition to that, like, even before you start, as a couple getting into business, I would say that you both have to be equally passionate about the business and its success. The recipe for disaster here is to have, you know, an asynchronous relationship in terms of, like, I am all about this business, and Karen's just doing it, like, fill up her days. That is not going to work, because then it very much develops into this employee-employer relationship, and those tend to be even more difficult to manage. You know, as a couple, there's just a lot of dynamics there that can go off the rails pretty hard. So if you're both, like, equally passionate and equally, you know, contribute towards the business that is going to be the way you're going to get to the promised land.

Sari
I love that. Okay, so after you sold Rocky Mountain popcorn, I don't think you landed at Teatulia next. I think you went a couple different.

Tim
No, I did actually.

Sari
Oh you did. You've been at Teatulia since then. Okay, I did not know that, learning all sorts of new things about you, Tim. So, all right, so you sold the business, and then came on to Teatulia. And why don't you tell us a little bit about Teatulia? It's was so fun to meet you originally, because I'm like, this was a tea we always had in our house. So it was fun to be like, yeah, staple.

Tim
I appreciate it. We all appreciate it. Yeah. So I got, I got to Teatulia the old fashioned way. I was recruited. One of my board members with open road snacks called me and said, hey, I know this guy that's doing a search, you know. And it happened to be a guy. It was actually a woman run business. The CEO was limited Apple lips use at the time, but that how I got there. So I walked in the door and she literally, I'm going to say a mild cuss word here, because I'm just going to quote Linda. She said, this is pretty much a shit show, and we brought you to be the adult in the room for all of us, yes, including her. And, you know, I walked in, and literally, I'm not kidding you, there wasn't. And this is at the time, it was around a million dollar business, but it didn't, wasn't a price list. The company didn't know its own cost of good. Literally didn't know its cost of goods. It goes on down like, so what are the accounts payables? Well, we don't know it.

Sari
The cash flow? We don't know!

Tim
On the one hand, like some people would say, oh, my God, that's scary. Well, no, it's not. Because the thing is that, you know, I knew what those things looked like, right? And I knew how to do two things, coach up those who were capable, you know, of contributing on that level. This is what we need. We need to be able to do this no matter what the task was. And if you, you know, we can talk about how you're going to do it, but we're mostly going to talk about the goal. And if you need some help along the way, probably have seen it come and talk to me, and we'll talk about the how, but mostly it's the what. And so we just started tackling these what's but the second thing is that there were some, you know, some people in the organization that probably weren't cut out for being where they were. They were in the organization for the wrong reason, or whatever. And you know, I've probably spent well over two years kind of molding the team, yeah, you know, some strategic, you know, sort of gentle pushes out the door, but also some very strategic hires of people who I knew could come in and contribute at a high level to this business, because they had been there and done that, and in some cases they hadn't been there and done that, but I saw in them what, you know, what we needed, yeah, so that was sort of the lay of the land when I walked in the door. Just funny story. So I walked in as Chief Operating Officer. And there was a chief operating officer when I was interviewing. And during the interview, Linda had told me, well, we're going to get rid of this chief operating officer. And the night before I started, Linda called me and said we decided to pivot a little bit. We're not going to get rid of that Chief Operating Officer, and also you two are going to share an office. So let me get this straight. You're going to replace this, it happened to be a guy, this guy with me, and also you're going to put me in his office. All right, let's go.

Sari
So did his title change? Or were you?

Tim
Yeah, he became a business development officer. And in fact, the story ends very happily. He is still with the company, and he and I, he mostly, mostly his efforts, my guidance, created a new business division for the company that became, in a way, its most successful and profitable business division is absolutely thriving today. He's still, I'm still proud to call him a colleague and a friend. As a matter of fact, just last night, he and I went to happy hour just to kind of catch up.

Sari
Yeah. Well, that, yeah, that took a lot of, like, letting go of his ego and that's pretty cool and I think it speaks a lot to your willingness to coach up and be flexible, and, yeah, a lot of humility, too. So that's amazing. So I mean, that had to be very, you know, that's entrepreneurial, where you see a big mess and you're like, cool, I got to come in and clean it up and do it my way. And, you know, do what I do best. So that had to be a lot of fun to come in there and do that. So you've been at Teatulia now for how long?

Tim
For seven years last month.

Sari
So what I want to talk about because, I mean, there's so many directions. It's such a cool company. You guys should definitely go check it out. I know you have a little offer for us too, but so, you guys, may you were doing traditional retail tea bags, and I think you also have a ready to drink product as well. Or you brought that in at some point, but now maybe it's two years ago, but you guys made a pretty big pivot. And we were talking earlier in the podcast about like you pick a strategy and you go all in and you don't change, but then sometimes you do change, but you don't do it just haphazardly. And I should say Karen, at some point, I'm not sure when she came over to teach Teatulia was also working there as your sales VP, or sales person, right?

Tim
Yeah, she was. So just that story real quick when we sold the business. You know, the purchasers actually required Karen, who was actually running sales at that time, to continue on with the business. So she had a two year contract, and it was, in a lot of ways, maybe one of the most difficult but also enlightening phases of her career, for a lot of reasons, but when she was released off of that contract, we also, we Teatulia also found ourselves a little bit of a crossroads, where we had struggled and failed to find the right sales person to head up the retail sales, retail sales in a small but growing business. CPG business specifically, is a really interesting, hard hire. You want someone who has this gold plated resume and who's been there and done that, and can pick up the phone and call the coronavirus whatever, right? But you find that, like if you go hire someone from Nestle there, it's very difficult to find that person who can actually translate their skills into a small, entrepreneurial environment. I used to say to, you know, to candidates, you know, like you're going to need to call Kroger one day and the next day you need to come in and, you know, make the coffee, because that's what we do, you know. And that's not the environment for everyone. And I've had some really big failures in that, hired someone who just didn't click in an entrepreneurial environment. And I've had some real successes. But the deal was, I knew that Karen had both of those qualities. She could pick up the phone call the Kroger buyer, but she could also understand that, hey, I've got this big presentation tomorrow. I'm not going to just, you know, throw it at the marketing department. I'm going to roll up my sleeves and actually, you know, get it done, maybe with their help, but get it done. She understood that, and she was really successful for a brief time in that role.

Sari
She made the tea, not the coffee.

Tim
We still drink coffee. It's okay.

Sari
All right, so Karen eventually came over, but yeah, let's talk about the pivot that you guys made because you were in major retail and you expanded into ready to drink as well. So kind of set the scene, and then how you made the decision to do what you did.

Tim
To go into to ready to drink?

Sari
No, as you pivoted out of retail.

Tim
Well, so the retail decision, I can make it sound like the most obvious decision that was ever made, but I can tell you that it's also probably the most difficult, because when we traditionally think of CPG companies, we think of their value being tied up in their retail distribution, right? If you want an exit value. And the whole topic of exit is a tough one. So let's just pretend we're all, you know, really mature adults here. And we say, look, every entrepreneur has got to be thinking about exit in some way, right? It's like, basically, like, purposely, like, bringing a child into the world to send them out for, you know, adoption. That's not the way we think, but it is. You have to think that way, even if you plan on running this business.

Sari
If you decide to run it, yeah, you still need a succession plan. Like you're not going to be there forever. So, and you want to set it up so that you don't, you aren't needed in the thick of it all the time either.

Tim
Right. So in the context of exit value, the way we think about exit value is it's tied up in your, you know, the value your brand is tied up in, you know, your customer awareness and satisfaction. And the way people traditionally think about that is, you know, in terms of retail distribution, so on the one hand, right? So the obvious part of the decision, that is not it, the obvious part of the decision is that, you know, when we did had one of those moments where we stepped back and said, let's go strategic and let's really look at the business. And we had, now, fast forward several years, we had the ability not only to know what our cost of goods would but we had the ability to understand what the P and L was by business line and by product and by a lot of other things. And in one of those moments where we're like, well, you know, let's step back and take a look at the long term, we started looking at the the retail, P, L, and realized that we were, you know, expending over 80% of our, you know, of our financial resources on a business line that had not been able to achieve the scale to get profitable, and was, you know, consuming all of these company resources. And we started thinking about, you know, imagine a world in which we could pivot those resources to the other lines of business that were successful. Were we able to make the case for that strongly enough that we were willing to walk away from, you know, that perceived big value being tied up in retail only, and eventually, with about six months worth of meetings, you know, at literally at the board level, and with outside advisors and everyone else, we were able to come to conclusion, and I was a driver here, even though my wife headed up that line of business. Don't tell her, but I was a driver like we need to think differently. We need to get out of retail, and we need to operate this company. We need to create that brand value in ways that don't involve, you know, us paying, you know, 75% of our revenue in deductions to these, you know, these distributors that are very difficult to make money with, especially at the scale that our retail operation was at. So made that decision, and it was a difficult one, and then I had to sit down and have a conversation with my wife that I never want.

Sari
Let her go, and she's amazing, and she has a brand, she has a different job.

Tim
She is successful despite my best efforts.

Sari
So we don't need to worry about,she's amazing. One day, I'll have her on too. She's awesome. A couple of things I heard there. I mean, that plays out the classic 80-20 rule, right? It's like 80% of our resources are going into this. That's probably not even providing 20% of our profit, right? And I mean, maybe revenue, but not profit. So that's a really big deal, and we talk a lot about that in Master Your Business of like, what's that 80? You know, where are you putting resources, and what have you restructured that and so that we got a better return on investment? I am sure some people, and I have some clients that I'm like, I just really hope that they heard this part that I don't know how many millions of dollars, because I'm sure you've grown it past a $1 million mark at this point, but you were in retail. You had all the fancy Whole Foods and Natural Grocers and Kroger and all the places, and that's a big ego boost. But you were not very profitable in that.

Tim
Right. And especially the retail business. And by the way, I also think you brought, I'll just riff on your ego thing, and that is also very difficult. So I was, in a way, an impartial third party at this point, still, like I didn't found this company. I care very, very, very deeply about this company. It is now I believe it is, you know, part of our, part of my soul, right? But walking in from the outside, I had the luxury of being able to sort of separate the ego of being able to see your can of tea canisters in the Kroger aisle or the whole foods aisle, or whatever, from the reality of the business. And that was the business despite, you know, at that point, despite, I want to say it was like 10 years of effort really hadn't made significant strides in retail, despite having, you know, Kroger and Safeway and Whole Foods and Natural Grocers and Sprouts, right? But we weren't getting to scale that allowed us to get, you know, to get to profitability, and that's very hard for a founder to see or admit, right? And a little easier for, you know, a guy like me. So we made the tough call, and we we went forward from that.

Tim
Yeah. I mean, that's what I do as a coach, is try to offer that third party, and I can see the issues, right? Because you're so close to it when you're the founder, but this is my baby and I'm on these shelves.

Tim
This is not the right answer for everyone. You know, I would not. I would say, be very, very, very careful about just saying, well, we need to get out of retail.

Sari
No, it's not the message, no.

Tim
Yo need to do what's right for your business. And if that involves, like, a really tough decision like that, need to be unafraid, but also you need to have done the work to be absolutely sure that it's the right decision for your business. We should almost we talk about this, making a tough decision and divorce that from being in retail or being or not being in retail. Certainly not advocating for that. I think that, I think that many fledgling CPG businesses have to be in retail.

Sari
And you guys built a brand there, right? Like you built customer loyalty, built customer awareness. It wasn't even a wrong thing to be in retail to start there, to be growing in there, but you gave it a significant amount of time and then when you actually did the factual data, I've got to look at the numbers, and you had enough history to evaluate it. And then, and you said it took you six months and lots of conversation and lots of discussion. It wasn't like just an overnight decision and and this could be somebody saying, no, I'm going to double down in retail, but I'm going to get out Amazon, or I'm going to get out of food service, because I'm splitting up my resources too much. I actually need to go all in on retail and get rid of food service like it could go any we want you guys to evaluate your business.

Tim
You just nailed that. That is absolutely correct. In fact, we also had the benefit of we had these so we're internationally owned. Our founders are from Bangladesh, and so when we were in the throes of this decision, we were also working with this international consulting group out of Sri Lanka and Dubai, and like all these India and all these wild places, and this was a topic of conversation with them for a long time. And those guys could bring to bear analytical resources that that we didn't easily have. Yeah, I mean, I'm pretty good with an Excel, spreadsheet, but so we had the benefit of some third parties and some really big like talk about, you know, perspective, like, bring in someone from not even this country, and you're going to get a lot of naive questions that have seemed kind of dumb, but you're at the end of the day, you're going to get a lot of lot of perspectives.

Sari
Yeah, it's actually sometimes better when I don't know people's business model too much, because then I just ask questions, like, kind of dumb questions, but it forces them to really think through their answers. Of like, why are we doing this? You know what? Why do we do it this way? So I know we you joke like we're out of retail, but we're still in retail, because it's a long process to actually.

Tim
It takes longer to get out than it took to get in.

Sari
That you might still be able to find Teatulia, but in grocery stores, but you really expanded into the food service, right? That was where you felt like to put a majority of your resources.

Tim
Well in part, and part of that decision making process was that we were, we had some real momentum in both food service and e commerce. And when I say food service, so food service, everyone thinks back of the house. It doesn't really help your brand, because, you know, no one sees the brand except for, you know, the worker in the back, taking out of the box, not true. There are ways to brand your product and food service, and we work really hard at that. Now, it's not perfect, not every, every teach really a sale at in food service is a brand new sale, but a heck of a lot of ours are a lot of sort of brand recognition awareness out of that.

Sari
Hotel or cafe is going to bring in a premium tea. They should be using a brand name.

Tim
If you go to a restaurant and you just get, you know, like a stand run in the middle restaurant, you just get a tea you don't always know or care or have the ability to make a decision as to what brand that is. But anyway, so that's that, but we also had some real momentum going in e commerce. So when I walked in the door in 2017 there was no Amazon business and nothing other than just a little, you know, a few $1,000 a month of sales on teatulia.com our own website. And you know, my first reaction was, you don't what? So I grabbed one of this bright, young, talented person from the organization, said, we're going to get back into Amazon, and you are going to make a name for yourself doing this. And she looked at me, and she said, what the hell took you so long? And mind you, this was like month number two. So the question was a little tongue in cheek, but it took us a long time. There the Amazon I call it the Amazon flywheel because you got to start turning it very, very, very, very slowly and just work at it every day. And then the Amazon flywheel for us was starting to turn. And so we we just refocused all those resources that we have been putting into retail, into our food service line business, our e commerce business. And I'm happy to say that what we lost the first year in retail revenue, we more than made up for with food service and e commerce growth probably like two times over. So we we were running about a 30% annual compound annual growth rate when we made that decision. And I'm happy to say that when we made that decision, we were able to not only maintain but increase that compound annual growth rate despite losing that you know that big chunk of revenue in retail, which wasn't profitable, but was revenue.

Sari
Right. And that's the thing, is separating the top line revenue from the net is like because we talk a lot in this industry about top line revenue, because it's the fun, sexy number, but like the CEO is doing the work of understanding what's the, you know, what's the actual profit? The bottom line and retail is expensive, and we're not going to go into all of it, but, yeah, you mentioned deductions. I mean distribution, you know promotions that you have to do so much, right? They call it death by 1000 cuts. And this is why, and you have to be very savvy. And I know a lot of bigger brands that just simply look at it almost like a marketing expense, right? It's like this is a way for us to be visible to people, but it's not a money maker. I think that's shocking for people.

Tim
That's not a bad way of looking at it in the convenience world, that analog would be travel. So like the travel Hudson news is of the world, right? Yeah, you don't make any money with those guys as a brand, no brand makes money. They take so much out of you that you don't make any money, but you get visibility. The most common way, when I was with open road stacks, most common way that people had heard of us was, oh, I saw you at Hudson news, or I saw you in the airport, airport store.

Sari
Which they were charging like $15 for a bag of popcorn, you would think.

Tim
I don't know who's making all that money, but I'm telling you, the brands don't it is, effectively, it turns into like an advertising expense, and writ large, very hugely giant retail could be looked at the same way now. I will also tell you that you. If you get to a certain scale, you need to run to a scale in retail. And when you kind of tip over the top of that, you know that scale point, whatever that is for you, then retail can be a tremendously good business. I'm not saying retail is a bad business. I'm just saying that to get to that scale requires a lot of resources, and either you're getting to it and you have the resources, if the answer to you those questions is no, then you need to think hard.

Sari
Yeah, got to do a lot of work to go get those resources. And it's takes so much more than just you as an individual, like, it's a whole team. It's a big group that's all all working for that one goal. So, yeah, amazing Tim, it's been so fun. Well, I know you had a I think you wanted to offer a discount code for teatulia.com

Tim
I do. I would love for your listeners to try our tea. We think it's more we're we're, by and large, single source. We control our own organic tea garden in the north of Bangladesh. We do great things, especially for the women in Bangladesh. So Bangladesh is a Muslim country, without getting too politically loaded about it, advancing the cause of women's rights and women's economic position in society ends up being really important to us. We think it's healthy, and it has been healthy. We've been at it now for 20 years, and we've done some really great things. So if you want to do great things, and we do great things for the planet, our agriculture is completely regenerative, and we're an oxygen factory for the planet where there was a desert, which is fantastic, so, but the most important thing is, like, you know, you can buy with your heart and and, but it only works until it gets to your mouth, and then it's got to work. And I'm, it's got to work in terms of this taste and performance. And I'm, I'm happy to say that most people who taste it do feel that way. So I'd love for your listeners to go out there and buy it after the sitting through my quick pitch and use the promo code foodbusinesssuccess. There's a lot of S's in that.

Tim
You turn it down.

Tim
So put those three words together, all without punctuation or spaces.

Sari
I'll put it in the show notes.

Tim
Yeah, 30% off at Teatulia.com, so go and try some really good tea.

Sari
Yeah, I think it's a good example of, yeah, a brand that's doing good in the world, but also you have to make money, right? It has to be a profitable company. You're not going to be around you need to have a CEO at the helm. And every business needs a CEO that's looking after the financial bottom line, that's defining roles and responsibilities that is always keeping people reorienting them to the vision of where we're going.

Tim
As Linda said, you need an adult in the room.

Sari
And you might have to put on a hat just you might be all the things by, like, putting on your CEO hat for at least a little bit in your business.

Tim
I'm going to go and get a CEO hat. I don't know what it looks like. I might steal that idea.

Sari
Yeah, this is part of what we do. We got the, this is the maker hat, right? You got like, yeah, you're going to have to be the maker sometimes. But if you need to define, here's my maker hours, and then I'm going to sometimes put on the CEO hat.

Tim
Got to get one of those so, mostly, so that my team knows when I'm about to be serious. A lot of fun. But you know, every now and then.

Sari
Maybe the gold fedora hat.

Tim
Let them know, hey, this is.

Sari
I know you are such a great mentor. You are so giving with your time and give to you know, we're in Colorado Food Works together, and you are so generous with mentoring early stage brands. So I'm sure you give out a lot of great advice. But is there anything you would leave us for our listeners around starting or scaling their businesses?

Tim
Yeah. Well, first of all, Sari, thanks for having me. I wasn't kidding when I started off with I'm a huge admirer of yours as well. I'm one of the few of the proud that hasn't ever read your book. And I think there's just a ton of wisdom in there, and you should all do it. But what I would say to, you know, to those out there who either have or are about to start a CPG business, a food business, whatever, go for it. I've spent a career in this space, and I've spent it with big companies. I've spent it with small companies, and my personality, my soul fits with that entrepreneurial is aligned with that entrepreneurial. I will tell you it's hard, and there's going to be hard days, and there's going to be failures, abject failures, probably along the way. But it's worth it. And as you can see from my gray hair here. I shave off most of my beard because it's mostly gray now, but that I've survived this long and actually thrived. And I say, go for it and go out there and put your whole heart and soul into it and make it happen.