Shari Wynne Ressler, CEO of consumer package goods (CPG) startup accelerator SKU (formerly Incubation Station), joined Startup Slingshot Radio to reveal how early stage CPG founders can excel at product development, distribution, and branding.
“What I would say is that, like anything else in life, I think that part of being successful, and this certainly applies to these companies, is that you have to be able to discern what you need to focus on today. Having that vision at the same time of what can be bigger,” Wynne Ressler explained.
1. The Value of a Mentorship Community
The lack of a mentorship program or community presents a major issue for most CPG startups. Finding mentorship can be tricky, but it makes a massive difference in the success of startups, according to Wynne Ressler. Mentors help CPG startups:
- Know what steps to take first to get off the ground
- Prepare the company for growth scale by helping the startup find the distribution channels with the biggest ROI
- Further develop already-established products to maximize branding
Mentors sometimes even invest in a startup, take a board seat, or an advisor position. Most importantly, mentors help startups realize that ultimate success requires a balance between financial success and a host of other factors, including success finding the best ways to serve their customers as well as more structural components like accounting and legal strategies. To learn more on how to find and leverage mentors and advisors check out this interview with Bill Boebel, CEO of Pingboard.
“It’s not just about the money. Money alone will not solve it if you don’t know what the money’s for, and growth alone will not solve it,” Wynne Ressler stated.
2. Product Development and Using a Market-Validated Approach
Wynne Ressler urged that early stage CPG companies should develop their product using a market-validated approach, which can give them a leg up over the competition. In fact, companies taking this approach will secure the feedback they need to succeed in developing the proper product and distributing it to their end customers faster. As opposed to products stuck in the ideation phase, founders that take the market-validated approach are able to:
- Demonstrate the current market demand for a product
- Secure the feedback needed to iterate on the product
- Scale a specific product quicker and with more success
- Have an easier time securing fundings
As you push to get your product out into the market using this approach, you should look to analyze the following factors:
- Are distribution partners taking it?
- Is it selling through your distribution channels? If so, which ones?
- Who is actually purchasing it?
- Does your product exceed customers’ requirements?
- What’s the perception of your brand?
“There is a proven method to scale and grow consumer product goods … and actually being able to kind of dial into that early can save so many companies, make so many more companies successful, it just truly can make a difference,” according to Wynne Ressler.
3. What About Branding and Mission?
Branding represents another extremely important aspect of a CPG startup. To get your branding right takes work, according to Wynne Ressler, and a variety of things must be taken into consideration when determining a brand image, including:
- Establishing and owning your mission
- Understanding where you are on the path to accomplishing your vision
- Deciding the best way to get your product in the hands of your target market
Your best option is beginning within your target market, determining what products that specific market needs, and then developing a brand image focused on the intersection. To learn more about how to do this, check out this interview with John Morgan, author of Brand Against the Machine.
“I think that part of being successful, and this certainly applies to these companies, is that you have to be able to discern what you need to focus on today,” Wynne Ressler explained about branding a specific product.
4. The Impact of Distribution
Determining the best way to get your product out to the consumer is critical for CPG startup success. To figure this out, you should take the following steps to help you come up with a fine-tuned distribution strategy:
- Identify your target market including their age, sex, and interests
- Decide at what level you want to start, whether that is in a smaller market or a bigger market for an already established product
- Look at both your retail and online presence, and identify whether you want to focus on just one or both
As a CPG founder, you must refine your distribution approach over time. Asking the right questions in the first place is crucial.
“With us, there’s a lot of discussion on what’s the best way to get out there and get people to try your product? How do you get people to have the experience of the product?” Wynne Ressler said.
Listen to the entire podcast to hear Wynne Ressler reveal other factors surrounding the key steps that CPG startups need to take to increase your likelihood of startup success.
William: Today at Startup Slingshot Radio I sit down with Shari Wynne Ressler, CEO of SKU, a consumer package goods startup accelerator. We jump into what early stage CPG founders need to succeed, including distribution strategy, product development, branding and so much more. If you’re a CPG entrepreneur or looking to launch a CPG company, you won’t want to miss this episode with Shari Wynne Ressler of SKU. Enjoy.
All right Shari, thanks for joining us today.
Shari: Thank you so much for inviting me, it truly is an honor to be on your show and have the opportunity to speak to you about SKU and share this with your audience. So thank you and I’m excited about my first podcast.
William: Yeah, I definitely appreciate your time. Really interested in what you’re doing at SKU, helping CPG founders. And in our time together, I want you to help the CPG founders in our audience increase their likelihood of startup success. To do that, we’re going to dig deep and dive deep into what you built at SKU and uncover specifically how you help entrepreneurs like the ones in our audience succeed in building consumer package goods startups. For people unfamiliar with SKU, if you can kind of give them that 20 second overview of what it is you all do?
Shari: Absolutely. First of all, what is SKU? SKU stands for Stock Keeping Unit, which we kind of talk about as being the atomic unit for consumer product goods. When you purchase a product, you purchase it by having a SKU. SKU itself is an accelerator, it’s a startup accelerator specifically designed for promising, market validated, early stage consumer product companies. Companies apply and those selected to participate in our SKU program participate in a 12 to 14 week program. Our team, which is our internal team, mentors and partners work with companies on every aspect of their business, including classes, mentorship and funding for scalable growth.
William: That’s a great overview. We’re definitely going to unpack that for the rest of this interview. Understand a little bit more about what you’re looking for, what you think people that are starting these CPG startups needs. As far as the startup goes, what problems, or CPG startups g rather, what problems do they face that, let’s say, your normal app or website tech startup doesn’t face?
Shari: That’s a really good question and I guess the first answer I would give you to that really explains why we founded SKU, which was formerly Incubation Station. Why that was founded. Really one of the biggest issues that people starting consumer product good companies have, is that they could not find, or it’s very difficult to find, a mentorship community. People who have done these businesses before, who are organized together and willing to share what it takes to be successful in a consumer good company, that community just simply didn’t exist. And the reason why I knew that is because I had, for 19 years I had a law firm in Austin, Texas that I founded that basically worked representing and connecting entrepreneurs and investors in a myriad of industries. And it was very difficult to find people to connect with our consumer good companies and our clients. So we were doing it, we were putting that together. When I saw, first that it was so difficult to do and second, that our Austin community did not have . . . These people were not organized, I thought, “This is an opportunity. Why don’t we look at Techstars and look at Y Combinator and 500 Startups, the ones that had been really successful, and look at what we can take from that, and what we can add to it to specifically target and help consumer product companies.
William: So a little bit about, the audience is pretty familiar with 500 Startups, Y Combinator. How do you all differentiate? What are the types of support or the thought process behind SKU, when you compare it to 500 Startups or Techstars?
Shari: I think first of all the number one thing is product focus. We started exclusively as a consumer product accelerator. That does not mean that as a consumer product accelerator . . . And that includes, just to be specific, food, beverage. It could be tools, it could be . . . It’s a number . . . beauty products. It’s a range of consumer product goods. Those product goods can be sold over the Internet and certainly consumer product goods may have some technology as part of them. Fans have technology, garage door openers have technology. But basically focusing on the actual good and the product is something that is very, very different than these other technology incubators that are focused on apps.
The other thing that was very different is, we focused on companies that had actually been market validated. Which I know we’ll talk about more what that means, but in other words, it’s not a product that’s just in ideation. This has to be an actually developed product. Third of all, what that allows us to do is it allows us to create and put together a module of class’s information that is specifically designed to rapidly scale that product in that market. There is, and we could argue, this also exists for technology and app companies, but in a sense there is a proven method to scale and grow consumer product goods, and actually being able to kind of dial into that early can save so many companies, make so many more companies successful, it just truly can make a difference.
William: Got you, that makes a lot of sense. As far as, you talked a little bit about market validated. So people coming into the program, they have already created a product. They’ve already shown some level of demand. How do they go about showing that demand, or validating it in the market?
Shari: Most of the time it’s going to be revenue, and in a sense where you’re selling and that you have velocity. But I’ll talk a little bit about that, but there is some really obvious things. So I’ve created a product and somebody is buying it. It’s a unique product, it’s a good product. Somebody’s buying it. So revenue is a huge marker of that, but it’s not the only. We have taken pre-revenue companies, mostly because if it’s a unique product in a particular industry. I’ll give you an example of that is Austin Eastciders. Austin Eastciders was started by somebody from London who used to have a cider boat and then came over to Austin, and wanted to create a London, a traditional cider. Which is a less sweet cider, it’s made with cider apples not in the United States. They had a proven product, in the sense that they had won awards and they had proven branding awards. They had not actually sold product other than in a test run, but most of the time it’s revenue.
The second thing is the product has to be good. It doesn’t mean the product has to be perfect and that we’re not going to be able to input or improve on the product design, or improve on how it’s packaged or polish the product. But it has to be a product that we think is ready to rapidly scale, that with some slight adjustment it can rapidly scale. So that’s very important. So just an idea that is just kind of working the kinks out probably isn’t going to work. The product has to, when we look at velocity, that means not only is it getting on shelves. Is it selling? Does it have an increase in revenue? Does it have an increase in sales? Are more stores taking it? Those are just a few things that I would say go direct, to whether it’s a market validated product. We have other things we look at as far as evaluating whether we’re actually going to take the company. But as far as the product, that’s just a couple of items.
William: Got you. I’m sure there are people sitting at home wanting this next question answered, which is, they can obviously see from your perspective why you want a market validated company in your portfolio, in your accelerator. Obviously it’s a shorter path to success. But if someone already has revenues and they have velocity, why do they need SKU?
Shari: That is a great question. I can tell you that in our fourth year we had two companies that were over two million dollars in revenue that participated in the program. So it is not just about the revenue and it’s not just about the product. Part of what consumer product entrepreneurs and companies face is that, the great thing is that we can create this products, and in a sense there is a skill level and an ability level to create a product that doesn’t necessarily translate into the ability to scale. Build the company and scale the company. Even if you were a very successful tech entrepreneur, and you actually know how to build and scale a company, that doesn’t mean you actually know how to plan for scalable growth in a consumer product company. It is very unique. It is a situation where having, bringing expertise around you, not just serial entrepreneurship, but serial entrepreneurship in that industry is really needed and it has a valid impact on these companies.
William: Got it. So it’s all about taking them and scaling the company, having the support network, those go-to people that can help them get to that next level. Is that correct?
Shari: Yes, and I would say really a big part of it is knowing how much money you need, when you need it. What do you need it for? We could go on with kind of all the different things we do for them, and I know we’ll probably reach this again. But it really has to do with information that’s specific to the industry and that particular product, and the history and understanding that, along with the innovation that is going on in the industry.
William: That’s really cool. So deep information, deep knowledge, rather. As far as the good product, when you look at a product that you’re considering, how do you think about whether or not it’s a “good product” or not?
Shari: There is an aspect of that that is subjective, and there is an aspect of that that has to do with consumer trends. We all know that natural, we all know there is a movement in food to natural, to local, to things that people feel are healthy, organic. Gluten-free, there are trends. Part of it is, there are trends that are followed. Then there are trends that in a sense become very deeply engrained. So we have probably a way that we look at them. Is this something that is going to be a product that is going to be the product of the future? Not just the product of today.
So with food it’s really easy. Does it taste good? Would we eat it? Do we think other people are going to eat it? Do we think it’s in an area that is going to be growing? Right now we have several wonderful gluten-free companies. We also have several grain-free companies that went through the last track. We have companies that are moving into areas of consumer products that have not been explored before, and we’ll be talking about those and some of our successes, but I think judging whether a product is good has to do with looking at where that product sits, how it’s being sold. It’s not just about would you use it? But the nice thing about consumer goods is there is a bit of, “Hey, I like that.” I think it’s one of the things that’s attracting people to create these products, is their usefulness and need and it’s attracting investors to invest in these products. “Hey, I can put my hands on this. I can understand this, I can support this. There is even a social element to this.” Or, “We’re helping people with this.” There’s lots of aspects that go into a product being good.
William: Got it. So it’s not just purely the utility of it, of soling a problem or solving a need. There is also, like you said, the trends or you’re riding a wave. Is their growth in the sector, is their momentum that you can kind of get behind that will create this business and help support the business as it continues to grow and go forward? Then like you said, there is that kind of opinion based, “Do I like this? Do I like the brand? Do I like the way it represents itself or what it represents?” That makes a lot of sense. Did I get that right?
Shari: Absolutely. Then after the product, which I think that we’ll get to, is when you look at the company. So you have really two main things. You have the product itself. Another thing I would add to that is, is it a one-off product or is this really a brand? Is this a brand that we can have multiple SKUs on? That’s the other thing we look at. Is this a brand that you could see, well it’s snack chip but can it be a snack company? We have a company in our recent group of companies that . . . It’s sold under “Must B Nutty” now. It’s an almond based tortilla, but it’s changing its name to Siete. It’s going to be what we believe is the first Mexican food, healthy Mexican food company. It’s all grain-free. It has what we consider, and I’ll use this to demonstrate, the right founders. So you have the product and the product is fabulous. I can tell you these delicious almond based tortillas are probably four times the price of the other tortillas. And if you look on the shelf next to them, shelf by shelf, it’s like the empty shelf. They’re selling five times more, up to five times more than all of the other tortillas. Really that’s because the product is good.
They also have the right founders. It was founded by a family from Laredo, Texas, who, one of the members of the family who happens to be the woman who created the recipe, has a background, the right background in nutrition and the education, but also got diagnosed with an autoimmune disorder. And was literally going back to her family and saying, “We want to eat tortillas again, we want to enjoy traditional Mexican food. First of all I need to be healthy,” so they all got healthy together and their first company was a gym that they started together.
Then she came up with this recipes and the tortilla being the first one, and her grandmother said, “These are better than my other tortillas.” Now we have this family of seven, Siete, that is going to be leading what we believe is going to be the standout healthy Mexican food company. So we’re looking for founders, the right founders. First of all, a sincere fit and a passion. Second of all, they have to be willing to be the kind of founders that are willing to do what it takes to grow a company. Which means understanding their skills and giving all they have to the company, and also bringing in the right people and skills they need to scale it.
William: Interesting. So you talked about the personal experience of that, Siete. The specific brand, the passion, the fit and obviously fits in with their lifestyle and what they’re going through at the moment and seeing the need for other people as well as the market is increasing for more healthy foods and obviously stuff like that, and then do they have what it takes is the other piece that you talk about. To actually get things done, to be persistent, to knock down walls that are in front of them, to surround themselves with people that are complimentary skill-sets.
We talked about the product, we talked about market validation. We talked about the right founders. Can you talk a little bit about the piece around, can this . . . I think you gave the example of a snack chip. Can a snack chip be a snack brand? How do you think about that? Because it seems like most entrepreneurs always are dreaming bigger than they have the ability to execute. They always can think 10 years ahead, or if they’re being realistic with themselves, it’s often 10 years ahead, but they think it’s going to happen in the next year. As far as their vision for the company, is there a difference between what they envision and how you see it?
Shari: That’s such a good question. I think that sometimes yes, sometimes no. What I would say is that, like anything else in life, I think that part of being successful, and this certainly applies to these companies, is that you have to be able to discern what you need to focus on today. Having that vision at the same time of what can be bigger. So to dial that down into the consumer good companies and one of the things that I think is so helpful, that SKU can bring and that our mentors bring to our company participants and to our community, is the idea of having the judgment around that. Because I think it’s the judgment that we can lack or the lack of experience of doing that before, to know what to do first.
So for example, Primizie came to us, our first class, our first track. We called them tracks at that time, it was in January 2012. We were interviewing companies for that and we had this couple come in and they had had a catering company. The gentleman who was the chef of the couple, he had created this fabulous chip. It was a very large Italian crunchy, chewy chip. I can’t tell you. It was . . . You could dip it, you could do all these things. It was great. Everybody said, “Listen, I love your catering. I want to buy your chips.” So they were basically asked to. But they said, “Where can we get them? We want them. What can we do?” So the gentleman who was the chef created the chip and they put it in a bag, and it was a very big bag.
The branding, I’ll just tell you, was Primizie, it was horrible. The branding was horrible. They brought this huge bag of chips, and the chip I can tell you, was about six inches long and it was like the biggest chip on the planet. So they came in and they’re this couple, they have this successful catering company. They’ve got this crazy size chip. It’s in this really ugly bag. I’ve got a group of probably 25, maybe 20 mentors. We’re all there and we’re tasting this chip, and they’re talking about it because they have to pitch to us. So they are talking about the chip and then, they’ve never had really another company, other than the catering company and they leave. Through the course of the interview program, because we interviewed probably six or seven companies that day, everyone had eaten every single one of these chips, and there was about a million calories in each chip.
We just said, “We have to take these people because the chip is so good. It’s just so good.” We said to ourselves, “Well there’s a trend and it’s called local and artisan. Because this is not going to be the fat free chip, this is going to be the local artisan chip.” And Primizie Snack Foods, now Primizie Snack Company was born. I can tell you exactly what happened, not exactly. But what happened in the course of our program was that, this chip was analyzed for size and salt content and all kinds of things. The branding was re-done and by the time we got to our showcase day, and we’ll talk about this, it’s our version of demo day, they had this gorgeous bag with the big red dots, so would fly off the aisles. We went through and they were re-branded and now this is a company that, a few years later, I think probably has something like 6 to 10 SKUs of chips. It has this gorgeous branding, it’s now a snack food company. The size of the chip, the healthiness of the chip has been adjusted. The founders have gone on, they’ve sold their catering company and they have a company now. A company that started from a chip.
William: That’s an exciting story and I love chips. And so one more time, what was the name of this one? I’m going to look it up.
Shari: Primizie Snack Chips.
William: Primizie. So talk to us about Primizie and the curriculum as a whole. All these companies come in a little bit different, they have a little bit of a market validated product. They have a little bit different of a team with different backgrounds, but they come into this accelerator program. How unique is the experience for each one, how structured is the curriculum?
Shari: Okay. So let’s talk about that. First of all, the program and I’ll just talk to you a little bit about the SKU class program, just in general and then kind of get into that. The program is 12 to 14 weeks, and when companies come into the program, we pay them money. They don’t pay us money. But it’s an equity exchange. So at this juncture, and this does shift track to track, but at this point if your company, and when you come to our program, if you have revenues over a million, the equity percentage that you will give us is 4%. If you have revenues under a million, it’s 8%.
What that gets you is access to all the programs, the mentors and the resources and also our alumni program. Because people in a sense have a graduation, but our continued participation remains. So let’s talk about the curriculum. So we have a curriculum that is designed not only to, in a sense, have broad brush concepts of what is needed for consumer product goods. So we start with the basics, which is vision, mission and purpose for what you’re doing in your company, a very shared concept with any other accelerator, I believe. But for consumer goods we have an emphasis on that, for SKU. Because we do want to create mission based companies. For profit mission based companies, you’re everywhere from product company and market size, packaging and branding. What’s the best way to market? What is your channel strategy? Then very general things that everybody needs, finance and accounting, legal. But then positioning messaging, it’s wide range. Team building, sales. All of that.
How does that work as we had seven companies, in our 2015 class? How that works is we do an analysis of the companies when they come in and we focus and structure breakout sessions and curriculum so that we make sure that we are getting our companies what they need. We interview our companies and try to figure out their expectations and add to that our kind of sense of the company and what we think they’re going to need from the program. So there is a lot of thought and structure in a sense, designed around personalizing it. That is the general curriculum. In addition, companies each get a team of mentors that come around them. First to focus on them, but second to ensure that they get everything they need from the program. So there is a team lead and there are mentors that are making sure that the companies are able to focus on what they need to focus on. Because each company and each founder has different strengths.
What you want to do in a sense, is to play to those strengths, and also be able to provide support around the things that they don’t have. They work with their mentor team throughout the program. In addition, and often continue to work with their mentor team after the program. Because the mentor teams many times, somebody from the mentor team or another SKU mentor or somebody in our community will end up investing then, or going on their board. Or just be staying an advisor, so that relationship continues to foster both in and out of the program. Then it’s all designed basically, so that they get what they need to know. They learn what they need to know and they get. What is the suggestions on structuring their company and preparing their company for growth scale, and then many of them, funding.
So there is also a curriculum that is based on funding and pitch presentation. That’s very important. But one of the things that we focus on at SKU is that, it’s not just about the money. Because frankly a lot of entrepreneurs, they think, “Oh, I need a million dollars and money will solve everything.” Money alone will not solve it if you don’t know what the money’s for, and growth alone will not solve it. Even sales, you can have all the sales in world and be getting orders to be in so many stores. But if you don’t know how to fulfill that order and what to do next, it’s going to blow a major opportunity. Because once you get into a store, you need to know what to do to stay in the store and to come off the shelves. So that’s a little bit about our program.
William: As far as the curriculum goes, we talked a little bit earlier about the branding, the product. A little bit about positioning and thinking through that. As far as the curriculum goes and the program, how do you all think about helping out with sales and distribution? What is essential for CPG founders? Obviously they’re probably having their own channel or their own website, but they’re probably going through other distributors. Distributors rather, or other stores.
Shari: There is a lot that goes into that. First of all, who should you be selling to and when, and where to go first? There is just a tremendous amount to unpack in that, and so many people would have different answers to this. But in any sense I would say that one of the things that happens with us, is that there’s a lot of discussion on what’s the best way to get out there and get people to try your product? A lot of the way that people sell, product demonstrations and doing these things so that in a sense, you’re not just on the shelf, that you’re actually there. If it’s a tasting, you’re getting it into people’s mouths. How do you get people to have the experience of the product?
That’s with a product, that you also want to in a sense get feedback from that, because that combines with getting it into people’s mouths. You also get customer feedback, so there is a lot of things intertwined in that. There is a discussion that goes on with each company, and I think it’s very individual as how are they going to sell. What is their online presence look like? What does the retail presence look like? There is not always agreement on that. We have one company, Criquet Shirts. Criquet is an organic, they use organic cotton and their original slogan was “Country Club Tested and Farmer’s Market Approved”. It was two gentlemen, two guys who met in school, they have been friends forever. Went to school, started a company. One of the guys, Billy Nachman has a family in the garment business, for many generations. Now they want to start this company and they want to grow the company. Where they were going to sell it, are they going to be an e-tailer or are they going to be strictly online like Bonobos? Are they going to go into retail? What is that going to look like? There was discussion about that and not always agreement about that in terms of how mentors see that. So it is not something that’s simple, it’s something that needs to be discussed.
There is also discussion around where do you go first. There’s things that people agree upon, like don’t go to Walmart first, probably. Because for most people, that’s not going to be the way you grow, home grow in a sense, a brand. That’s where you go last or that’s where you go mid-tier, or to really blow up the sales and to do that. But instead, do you grow it locally? I will say that there is a lot of discussion and a lot of focus on starting regionally. We start, a lot of our product groups start by conquering the Austin market. Are they going to be in Whole Foods or are they going to be in HEB? How are they going to do that? Or we have a product in this track, which is Mythic Essentials. Which is this amazing kind of anti-bacterial chalk, they can’t say they are anti-microbial. They are not patented medical product, but they have been shown to be able to actually infuse essential oils into chalk. Having that chalk, have those essential oils, have some level of prevention of disease and also improve performance.
So they’re not necessarily go into a HEB or a Whole Foods. They’re not a food product. Are they going to go to a particular line? Are they going to go to gyms? There is a lot of uses for this product. Are they going to focus on the sports industry? Are they going to focus on kids? Right now they’ve decided, and they are focused on the sports industry, and they’re also focused on kind of revolutionizing things like Gold Bond, and body powders that really don’t have the essential oil benefits, that they can bring to this. The inventor is one of the founders and he’s in the company. So that means that they can continue to invent and continue to change this product from within, which is very exiting. But where they are going to sell and how they are going to sell is something that they’re going to spend a lot of time on.
As far as just learning how to sell and pitch, they need to know how to talk to retailers. So many people with products get to the point where they actually get in front of a retailer, and ask them basic questions about the vocabulary of consumer product goods. It is a complete waste of a meeting. SKU has become involved with a retail council called GMDC, which has about 450 retailers in it. That amazing council has programs that they have, and consumer product companies go to them and literary get in front of the head of sales or the head of procurement and innovation for a particular company. Instead of being prepared to talk about how their product is going to sell and where it fits into their store and helping them understand how their product can help their retailer be successful, they’re asking basic questions. So our job is to get them educated enough so that when they get these opportunities, they’ll ask the right questions.
William: Gotcha. So for that example, like you said, talking to retailers, it’s knowing your stuff, it’s knowing the vocab. Knowing the shorthand, all the different expressions that will be thrown out in the meeting. They’ll stumble over those, instead spend the time selling the product and making sure that you’re fitting into their world. How they think about things and how you can help them succeed in selling products, servicing a specific type of customer. Did I get that right?
Shari: Yeah. I think that it is very, very important. You’re so excited about your product that you tend not to put yourself in the mindset of the person who is actually purchasing it. That’s true for the purchases at the local levels of the stores, that’s true for understanding what’s going to happen and who’s going to be distributing your product. Who is the right distributor? That’s a very big part that somebody who hasn’t done it before and doesn’t understand that, has to overcome. It’s things that do get overcome in a sense, because one of the good news about consumer product goods or the consumer product industry is that, retailers know they need these new products. There is a wave and an innovation, and a sense of paradigm shift happening in consumer goods. Where even companies that were very comfortable before are no longer comfortable, and understand that these new products and goods and innovation that is happening on the founder level, is going to make or break their company in the future.
William: If we took one step back and looked a little bit more at like that sales framework you talked a little bit about; online only, retail only, the blend of online and retail. You also talked about kind of your geographic approach. Are you going local, regional, national? And then you started to talk a little bit about what I’m kind of labeling as types, which sounded like department stores, specialty store. That type of stuff. Is that kind of how people should think through their approach to selling?
Shari: I think that you need to start by dialing down and saying, who is it that’s going to buy this product and use it? Understanding who you want to be selling to. Who is your target market? From that target market comes the channel strategy. I think that one of the things that we do at SKU is to look at that target market, and look at what is the best way to reach that target market. When you look at a retailer then and you say to yourself, “Okay. I am in Whole Foods because I am Better Bites Bakery and I have an amazing gluten-free line, a grain-free, allergenic-free . . .” This is just the most amazing product, it’s absolutely delicious and they create sweets that look like, there is one sweet that she has, that really reminds me of a ding-dong. This is going to date me, but it’s just so delicious and yet healthy and her child that was diagnosed with autoimmune disorder now is a healthy happy child, because she learned to feed her child. To remove certain things from her child’s diet. Now gives him cupcakes and birthday cakes along with everyone else, that is not going to make him sick.
So there is this amazing product and it needs to be cold now. So there is a place in the store where that’s going to go. Her Better Bites products and her donut bites, and I think she’s got several SKUs now and tremendous momentum. One of the things that you’re looking at is you’re saying, how is it that this product can go and be proliferated in the store? How is it can be everywhere? That’s something that you want to look at. You want to look at how it is that you just don’t become a one-off or a one place. Really what you are looking at is; how is it you can make an impact? This is an incredibly competitive industry, and you’re trying to understand in the long run after you can show that you have a product that can sell and that can move and that’s good, and that has the right people behind it, it’s very strategic. It’s very strategic and individual. That’s what I’m trying to tell people and tell the people that are listening, is you can look at . . . A lot of times what happens is you go to school, and you go to school and you look at the brands that you really respect and are doing what you want to do. That’s one of the ways you do it.
Not everybody is going to go through a SKU program. So how would you know what to do? There are brands that you see moving and growing and getting traction, look at what they’re doing. Look at how they’re talking about themselves and where they’re placing themselves. I don’t think you can do everything through comparison, because there is always that kind of coming up with your own ideas and innovating your own ideas. But you have to do both, you have to innovate. You have to come up with your own ideas, but you have to go and look at other products and see, what are they doing? What is it that made them successful?
William: Right, yeah, that’s great advice. As far as the mentors that you have, are you allowed to say a little bit about who they are, what they’ve accomplished and then what their skill sets are? As far as, I guess two separate pieces. One is like, who are some of the mentors, if you’re allowed to name them. What are their skill sets? Then overall, what are some of the other skill sets that people that are mentors in SKU have?
Shari: First of all I will tell you that we are certainly allowed to name the mentors both past and present, in terms of our rounds. Our mentors, once they join SKU as a mentor they are in our mentor community. We’re very proud of the mentors that we have, because they are people that have been accomplished. I will start by saying that there is a combination of things that they bring, and the mentors have one or all three of these things. One is that we have mentors that are greatly experienced in serial entrepreneurship. Some of that is with consumer product goods, some of it is with a range of industries. But certainly the consumer product goods is a huge part of that, and I will talk to you about that. Secondly there is industry expertise. So serial entrepreneurs, industry expertise and then the money guys.
The money guys who have both grown companies and invest in companies. So that’s kind of just generally what we look at. We also do, we ask mentors and we analyze the different strengths that they have. That they bring to the table and that they want to share with our companies. So I’ll give you an example now based on that. I’m going to talk about Brian Goldberg, because Brain Goldberg, it was just announced that the company that he recently joined as CFO has a product called Skinny Pop Popcorn, and they have just gone public for $275 million. That got announced today and it’s actually in our Austin Business Journal, as well as I’m sure it got announced other places. Brain Goldberg was a mentor and he’s also a very good friend. I start with Brian out of no respect for Clayton Christopher, because I’m going to mention Clayton just a moment. But because Brian was in Sweet Leaf Tea with Clayton Christopher as well. But the interesting thing about Brian is that he’s just a CFO extraordinaire, and companies bring him in when they really want to go big and he has a tremendous amount of experience.
One of the things about Brian is he knows how to grow companies and get them into their next stage, which he’s done for Skinny Pop. I do want to be clear that Skinny Pop is not a SKU company, that’s a company that is a SKU type of company, because it’s a consumer good. But Brian works with companies in SKU on obviously a lot of financial issues. But his general expertise in growing and selling companies or transitioning companies, high growth companies, is always going to come to bear.
Secondly I would say and I should have started with Clayton, because Clayton is really truly a co-founder of SKU. SKU was founded when I had this idea, and really wanted to help people. I went to Clayton because he had recently sold Sweet Leaf Tea to Nestle, for $200 million. Clayton and I had known each other in the entrepreneurial community for many years, and we were friends and I said, “Listen, I have this idea. I think we can create this community and I’m really excited about it, and I think that we can help a lot of people. I think it could be really a lot of fun. We can be helping Austin diversify our industries,” which was also important to us. To help to build an industry in Austin that was not just technology. That was acknowledging people and helping people that weren’t getting help before, and Clayton was very excited about it and he said, “Let’s see if we can build it.”
Since Sweet Leaf Tea and since SKU, Clayton has also . . . He’s involved in myriad of companies and he’s on the board of a myriad of companies. But I will say, the one that he’s probably most known for now is founding Deep Eddy Vodka. Deep Eddy Vodka is a very successful brand here in Austin and beyond. He brings to the table a tremendous amount of experience in serial entrepreneurship, in the CPG industry. His connections, I know that he invests in a lot of our SKU companies. So he really is a person that has expertise across the border and that’s an excellent person. He’s also a chairman of our board and I’m just proud to have him involved with SKU and call him as a friend.
Scott Jensen, he was involved in Stubb’s Bar-B-Q. Stubb’s Bar-B-Q Sauce, I don’t know if you know, but he and Matt Gase, who was another mentor of SKU and other people that are involved in Stubb’s just sold that company for $100 million, I think that was just a couple of weeks ago. Scott is currently involved in Rhythm Superfoods, and Rhythm Superfoods has kale, snack chips and other healthy snack foods. He’s on the board of many, many companies and is just a really big influence, along with Clayton, in this community. One of the gentlemen, and Scott again is across the board, really looking at strategy and what to be done with these companies, and to grow them to scale and to sell.
Joe Canterbury is a little bit different in background. Joe came from Starbucks and was in sales, international sales and development with Starbucks for many, many years. Joe was also active in the Austin community, and brings to bear that sales expertise. So each of the mentors in a sense, have a tremendous amount of background and credibility and experience that they bring and pour into our companies. I’ll give you just a couple of more, because I want to make sure that we cover a range.
Dan Graham who is also one of our board, co-founded BuildASign. He’s the founder and CEO of BuildASign, and it was founded from the ground up to basically just innovate a sign company, which nobody would have thought. It’s an online company. He also owns and has founded wearables.com and has invested in several companies. But Dan is highly involved in the online businesses and he’s gotten involved with an online business that we have, called Pride Bites, which is a dog toy company that is a customizable dog toy and dog product company, but just many others as well. That company is, he’s won all kinds of awards and he’s just an amazing . . . And making a huge impact in Austin beyond innovating companies.
William: That’s really interesting, because Dan has been on the podcast before. So if people want to listen to Dan a little bit more about how he’s built up BuildASign, they can definitely Google Dan Graham, Startups Slingshot and listen to him talk about how he’s built that culture and a lot of different interesting stuff. We talked about the chip company that came through the program. Is there one other company kind off the top of your head that you can talk about, and the process through SKU and how they kind of transformed and the success they’re having today?
Shari: Absolutely. I would say that the company that I would, and they are all so many. We had a company in track one, who came into the program. They came in as Thunderbird, it was a couple and they were very healthy and they had created a healthy bar. A snack bar, so that they would be able to keep their energy and run and be successful in what they were doing. When they came in the program, they hadn’t sold a whole lot of the bars. But they did have some traction. They also had a great brand and sold a lot of swag.
Today they have transformed their company, they actually sold the original brand. Created a new brand called Epic Provisions, and is just growing an incredible brand based upon these amazing protein-based bars. It’s been amazing. They have now received funding from Boulder Brands and Whole Foods, and they have increased into the many tens of millions of value of their company. So that’s very exciting. I have another short one if you have time for it, or you can certainly cut it out, which is Adam Grossman of Seaweed Bath Company, who was in our third year. The Seaweed Bath Company when they came to us, he had already sold, was in 1,300 stores I think and had already sold millions of dollars of product, but he was really looking to get to the next level. Within, I would say, two months of leaving, in a sense graduating from our SKU showcase, they had raised from two ex-partners, $6.2 million and is now no longer a small company but a mid-sized company. I would say the same for Epic who was recognized by winning the Austin Chambers Award for one of the best growth companies in Austin.
William: Very cool. That’s a great overview of the program, great overview of some of the mentors inside. Some of the problems that the founders in our audience are facing. How they can start thinking about addressing their sales, their branding, their product. As far as for the CPG founders in the audience, that either are looking to get to an accelerator like SKU or looking to just ramp up and validate their product on their own, are there other resources outside of SKU, maybe books or podcasts or blogs that you all kind of use or leverage to help educate the people inside the program? Or that you suggest to up and coming entrepreneurs?
Shari: We’re on Twitter @SKUatx. We have a blog as well, but I would say, when I was preparing for this, this is one of the things. There are a myriad of people to follow. There’s kind of the traditional, certainly Brad Feld and everything that’s happening. Also over at Y Combinator, is Paul Graham is very exciting to follow just in general for business. But Jessica Alba is doing at The Honest Company, is really amazing and what the Spanx founder is doing is amazing. One of the things that we’re doing at SKU is really focused on creating curriculum, because the curriculum for these companies is really not as readily available.
I know that people are getting a lot of information from Shark Tank and Shark Tank is fabulous, and there are the sharks that write books on consumer product goods. That, I would definitely direct you to. But one of the things that we’re looking forward to doing, is also creating these resources so that there are more people to follow. But I think again what I would really encourage the entrepreneurs to do, is to look in their own industry. Look for the people that are doing what they are doing with related companies, because related companies really do have a lot to teach us about what you want to do with your company.
William: Gotcha, that’s a great piece to drive home for the audience. If people want to connect with you or learn more about SKU, how can they do that?
Shari: Feel free to connect with me at email@example.com, and the shout out to Incubation Station is sku.is. So it’s firstname.lastname@example.org.
William: Very nice. I’ll put the link to the website, the Twitter handle, the blog and show notes below the video or below the audio player rather. Shari, this has been a great interview and really appreciate your time and thanks for joining us today.
Shari: Thank you so much, have a great day.
Shari Ressler’s Bio
Shari Wynne Ressler is an Austin-based entrepreneur and attorney passionate about helping people achieve success. Shari is Founder/President of SKU (formerly Incubation Station) (www.sku.is) a leading consumer products accelerator that rapidly scales market-validated brands, Founder/President of MWR Legal (www.mwrlegal.com), a full-service law firm representing and connecting innovators, startups and high-growth companies since 1996. In 2015, Shari will co-launch the Entrepreneurial Law Bar Association (EBA), founded to bring together business counsel worldwide to inform how to represent clients and foster growth in the new economy. Shari is an avid mentor, investor, active participant in the Austin entrepreneurial ecosystem, a past-president of the Austin chapter of the Entrepreneurs’ Organization (EO) and RISEwomen. She holds a BA from UC Davis and a JD from the UC Berkeley School of Law.