🍫 JESSE BARRUCH // WHIMS CO-FOUNDER

0:00I'm Sam Rose, and this is Commerce is Chaos, the podcast for consumer brand founders who know that building a business is messier than the highlight reel shows. Your supplier just missed their deadline, your top product is out of stock, and your competitors somehow just launched the same thing at half the price. Sound familiar? Every week, we dive into the real problems that keep founders up at night, from inventory disasters to supply chain nightmares, because surviving the chaos is what separates brands

0:25Jesse Baruch:that fail from brands that scale. jesse i love talking to you because you are tackling like a really hard challenge which is better for you things that taste delicious uh or in your case like chocolate that tastes like the original see how i just like rolled right into it there love it it's gonna you know be in karma vibe like that um okay so some stuff about the product you've got one gram of sugar per piece um most healthy alternatives are like cardboard tasting so how you got that little sugar into something that tastes, and I can attest, really, really good is a bunch of stuff that I want to ask about.

1:03But before we get too far into it, like, do you, did you have a systematic approach to this that you took when you wanted to like, crack this challenge that really, really big businesses have also struggled with?

1:19Jesse Baruch:Yeah, we were really inspired by, I mean, there's so many categories that we drew inspiration from that reimagined, you know, really, um, really popular products in a better for you format. And so we, we had a concept only, um, some initial versions of the products were super healthy and they tasted terrible and we happen of our product. Yeah. It's easy to do healthy. The truth comes out, but, but, you know, doing healthy in a way that really honors the original taste and experiences is a challenge and we we met our head of product in a park very randomly um so we had a lot of serendipity without no this is long before walter we had some samples of our first ever peanut butter cup that was very healthy and didn't taste like a peanut butter cup at all and we went to go pick up our daughter from school and it was this like picnic that we didn't know about and leanne my wife said to me go get those peanut butter cups we'll hand them out to parents and see what they think and we're handing them out to parents and a friend of ours said told us wait here disappeared into the crowd of parents pulled this woman in front of us and was like give her one and we gave this woman uh one of our peanut butter cups and she sort of like took a bite and smacked her lips and looked off in the distance for a few minutes and then like the sommelier of peanut butter cups that she delivered like a 10 minute dissertation on what was wrong with the peanut butter cup and I was like like who are you how do you know this and um turns out she's a classically trained pastry chef worked all over the world and had worked in food manufacturing and I got her number met her for coffee the next day uh we hired her and she's our head of product so we got very lucky with, with our product journey.

3:16That's an incredible story. I just picked her out of the crowd. Yeah. And she's a parent at your school.

3:24Jesse Baruch:He was, she, her, her kids and our daughter went to the same school. That's incredible. Back in Canada. So, you know, and you know what I love about this is that like, uh, you can't, you can't really manufacture serendipity. You can manufacture good tasting one gram chocolate. That's like a whole other thing. but you have to have the boldness to just make a connection and a relationship in a moment like that like if if you know Leanne hadn't said that then how would you have found your incredible head of product you just have to take a risk like that like let me talk to someone which doesn't sound like a big risk but I'm so surprised at how often it's just easier to just be like no like we don't I don't want to bother them no I won't say anything and then you do you take the risk and you say something and all of a sudden you've got the sommelier of chocolate on your team.

4:10Jesse Baruch:It's funny. So much of our journey has been characterized by like a step out into the abyss and the path appears. So how did that happen when you were sourcing like ingredients and suppliers too? Or what was, how was that different? Even pre, we had a concept and an initial version. we hadn't even contemplated ingredients manufacturing production i don't even think i knew what that was so this was like early concept vision and like a kitchen made recipe wow and when you bought the first set of ingredients you just went to the grocery store i mean at that stage yeah um yeah tell me like your like your ingredient sourcing step ladder You start at the grocery store and then.

5:04Jesse Baruch:Yeah. And no wonder it didn't taste good. Like we were using, you know, off the shelf blended products, someone else's chocolate. Like, you know, we hadn't even contemplated what actual like production meant and sourcing raw materials for production. I didn't even know if we knew that we would make our own chocolate from scratch. That was something that we kind of fell into because the, it happened to be the manufacturer we went to made chocolate. And so we're like, okay, I guess we're making chocolate rather than sourcing someone else's low sugar, dairy-free chocolate. And I mean, we had sampled a bunch of different recipes and didn't find anything we thought matched the taste experience and nutrition profile we were after.

5:52Jesse Baruch:So maybe it was inevitability, but like, it certainly wasn't something we thought through in the early days. It was like kind of one thing led to another. Tell me a little bit about making chocolate from scratch. Like what are the ingredients? You don't have to give us your secret sauce if you don't want, but what are the basics of making chocolate from scratch? So, yeah, that's a great question. So the true form would start with beans and roasting beans. We start one step later where we mix cocoa mass and cocoa butter. So, you know, you hear often like bean to bar, that's where they're starting from the bean with a custom roast, a custom sort of blend of bean.

6:35Jesse Baruch:We start one step later where we're, you know, buying cocoa mass or cocoa liquor, which is like 100 % dark chocolate. And then adding cocoa butter as a fat and our sugar substitute. And we use oat milk powder for our non-dairy source of milk. And then it goes into a conch refiner, which is this, you know, big machine that is like, you know, created like 100 years ago that basically grinds all the particulates together into a very fine kind of like a paste. And that's sort of step one of how you make chocolate. And we happen to perfect our recipe with a guy who was a fourth generation Swiss chocolatier.

7:22Jesse Baruch:Cloutier. Again, he was a guy in the neighborhood. Like, yeah, he would, you know, we, we were in Canada back at the time and just happened across this guy who'd been in the chocolate business for 40 years. And he had all this equipment. And so, you know, again, we weren't really intentional about how this would all come together. It was more a function of just who we happened to meet early on on our journey and taking that vision, bringing Leslie, who like understood how this all worked and, you know, happening upon a guy who was a Swiss guy who had built a chocolate factory 40 years ago in a small industrial complex just outside Vancouver.

8:08Jesse Baruch:And it kind of all came together that way. Wow. Yeah. I think your stories are bringing me back down memory lane. There are so many moments where early in my kind of like entrepreneurship, you know, like founder mode story of just like having this vision of something that needed to come together. It's just a lot of smile and dial or for you walks in the park for you is literally a walk in the park, which I know is not the metaphor. Um, but, uh, but just that ability to sort of like connect fearlessly with people and ask for help gets you, gets you to the next place over and over again. And, um, yeah, it's, it's, uh, easy to overlook that when you're talking about like systems and processes and like, you know, like the steps to go from A to Z.

9:00And it's like, one of the steps is just like, talk to your neighbor. It's a valid step. Um, okay. So you, so you learn about, uh, Coco Mass and all of these manufacturing processes. There's a bunch of other stuff that goes into, I've watched enough of how it's made to feel like an expert on this. So there's other factors, right? Like temperature control, humidity, and timing. These things are like, chocolate is tricky. It's a high variable thing. It sounds like you manufactured some luck for yourself in terms of finding the right people to work with. But now stepping back that you've managed these successful relationships, if you were to kind of pass that along as advice to the next operator, what would your advice be in terms of like non-negotiables for selecting a manufacturing partner or like someone who maybe doesn't take that step and run into their neighbor at the park?

9:58Like, well, if not that, then what?

10:01Jesse Baruch:Yeah, I think one of the things that I share often with early founders who are working either on a recipe or their self-manufacturing is you've got to engage early with manufacturers. Anytime we've made a manufacturing move, we've needed to alter our recipe to work on equipment. Specifically, like, you know, any food production, there's a balance between vision of outcome, recipe, and the equipment. So I think engaging earlier than you think you need to with manufacturing partners starts to help you discover everything you're going to need to figure out along the journey, including packaging. you know because I think I didn't appreciate we happened you know we our first manufacturer and we've moved since but our first manufacturer had like labor constraints around getting the product off the equipment into the flow wrap into the pouches and so you know it's even just like all those steps of figuring out not only what does the manufacturing process look like packaging pack out, case pack size, you know, all these things you get confronted with by, as you go through and evaluate manufacturing partners.

11:21Jesse Baruch:So I think starting earlier than you think you need to starts to help you discover what decisions you're going to need to make down the line. Do you have like a, like an ability now to detect when, for other people's products, right? Like you're in the store, you're shopping, you buy something, you've maybe bought it five times before you buy the next box, can you taste it and be like, oh, they just went through like a production line change? Like, do you know the types of things to look for that are indicative of like quiet but massive changes underlying? Yeah. Or even, you know, talking through things like price pack architecture, um, when people are manufacturing a product themselves and starting to gain some scale, you know, thinking through even just talking through with them the amount of time they spend just on the production side.

12:14Jesse Baruch:And, you know, I can only imagine like with all the things you have to do to grow your business and build distribution and manage an entity of any size and scale, you lump manufacturing and production on top of that. And you just, you know, you're, you've got three full-time jobs. And so, you know, more so, not necessarily from like a taste and experience perspective, but more so like the mechanics of how it works when you're doing self-production or your, you know, your cost of goods doesn't factor in your own labor. Because you consider that like, well, you know, I'm just here making this anyways.

12:56Jesse Baruch:And so when I look at my cost of goods, I don't have a factor for labor in here because it's them in a commercial kitchen or they're only factoring in rent of that kitchen space. So more so, you know, I find myself in conversations with folks early on about thinking through that whole manufacturing production process in food, which, you know, which is super complicated to do, generally speaking. So it's more so that than product quality type components. Yeah. And when you, okay, so this is really interesting. So you start off, right? And you're working for the business for free because that's what we all do.

13:36Until we realize what a huge mistake that is.

13:38Jesse Baruch:Wait, do you mean one day I'm going to get paid for this? Every 10 years. Once every 10 years. Wow. But as the business grows and scales, right? Like you're just one person, although I know you and you have so much capacity. You might be two and a half people, Jesse, but like for the normal, for us normies out here, like we're all one person and then the work becomes too much and we have to buy help. And so you go find some help and you're right. Like it's so easy not to price that in to the product itself. Like how do you, I mean, we overlook that in the unit economics. That's obviously happened for you.

14:18You've got some scale here. How did your unit economics change the minute that you actually had to like pay someone else for the time that you should have been paying yourself for?

14:28Jesse Baruch:Yeah. I mean, the context I had for building whims from the beginning was that I didn't know how to do any of these things. I certainly didn't have a culinary background. I wasn't going to take on a production environment. I needed help building a financial model, setting up our accounting. Um, branding and marketing required a level of expertise that I knew I didn't have. And so I always thought the context I had for this business was always that I'd have to figure out, you know, how to be the coach and find the players who could do all the different things. And so even today, you know, um, you know, we've, we brought in help early for every aspect of the business so that we could, um, you know, build in and appropriate for size and timing and scale, but bringing in outside help for the functional areas that I knew were important to invest in early, I mean, that was like day one.

15:28So part of what I did day one was

15:31Jesse Baruch:figure out how to get capital into the business so that we could start to build the infrastructure we knew we needed to build the business. Tell us a little bit about that. What was that journey like for you, the journey of getting capital in? Well, it's, I mean, it's ongoing. Yeah, it's not, I think it's the thing that probably it's the one area that I talk to more than any other area with founders. I think you have to do two things. You know, everybody's focused on product and product market fit. And I always thought about it as, yes, that's important, but equally important is, you know, business market fit.

16:12Jesse Baruch:So you validate the product by seeing, would a consumer trade their dollar for the product you're making? And I think you have to find business market fit. It is an investor, regardless of their proximity to you or how sophisticated of an investor they are. Can you create a compelling vision that has somebody trade their dollar for a piece of the vision that you have for the business you're building? And so I had never raised money before, And I knew that in order for us to build a really big business, I was going to have to become excellent at a few things. One was raising capital and never having done it before.

16:54Jesse Baruch:I just thought I got it. I'm going to get this wrong like 50 or 100 times before I get any insight into what it looks like to get it right. And so I just started pitching day one, you know, the absolute wrong way. I figured out all the ways that pitching doesn't work. I thought you were going to tell us how to do it right. Yeah, I found out all the ways that didn't work. That's actually better. Okay, tell us the fail story. I'm going to write them down, the list of things, the way to do it wrong. Yeah, closing in the first meeting. That never works. um you know i think i well well i i think we all like intuitively understand that it's a relationship to build it's a process to enter i certainly started maybe even though i think intellectually i got that i think that um i was still very transactional in like the pitch um i had only seen shark tank right that was my that was my frame of reference for what it looks like to raise money a high pressure pitch and that doesn't work so well in a coffee shop with a friend um and so you know i think i got it took me a while to learn um you know a capital journey is not unlike the others of the business in that you get a lot of serendipity there as well right?

18:28Jesse Baruch:For us, like the right partners have always shown up when we needed them. And that includes folks who've invested. And so I think like having a level of preparedness for when the investors show up, that you've done the work to build the deck, build a model, you have, you're focusing on investing in areas that actually grow the business, lead the sales. You're not spending on brand build activity in the early days because, you know, there's no real return for those dollars. So for us, it's been like raise a little, build the business a little, raise a little more, build the business a little bit more.

19:03Jesse Baruch:And so our journey has been long. And, you know, I think everybody starts thinking you're going to approach the funds and they're going to see your genius and they can't wait to fund your idea. That's not true. Certainly, it wasn't in 23 when we launched our business. There was, you know, perfect timing to raise capital. So, you know, it's really been angels for us on our journey. And they've been folks who've either we've been connected to along the way or maybe about two, maybe a third of our investors have been folks who found our product out in the world and emailed in to figure out who we are, what we're doing and happened to have, you know, invested.

19:53Jesse Baruch:So I think it's a bit of a dance between making it happen and letting it happen. At least it's been that way for us. And so I think you've got to confront what it's going to take to build an investable business before you need to. Yeah. I, uh, you know, reflecting on some of my own fundraising journeys, being pitched to pitching the back and forth of all of that, um, like product, the product of your financial model, the product that is the business itself, which is a business is a product to, uh, product of orchestration, organization, people, in a way, those things are like, they're given for a successful fundraising conversation, right?

20:48You can't get really through the door. Maybe you can get the first meeting, but you can't get the second meeting without having that pretty dialed in. And then it's talking to your neighbors, right? Like, this is a lot like the sales cycle for the finished good product too. It's like, that's a given. Like if it doesn't taste good, I'm not even going to, we're not going to really have a meeting. So you can know that I know that the product is good when we're having a conversation. But the next step is like, are we vibing together? And that I have found true in the buying journey for buyers at stores.

21:25And it's also true of the fundraising journey. It's like the product of your business is the first step. And if you don't have that dialed in, the conversation is very, very short. And if you do, then it's about, it becomes about a relationship.

21:40And yeah, you can't escape that piece of it, you know? Yeah. Yeah.

21:46Jesse Baruch:And, you know, I think also in the early days, there's lots that you might have good answers for, but truly haven't figured out and thought through. and when you check in with yourself after those meetings you realize yeah I kind of give a fast answer there that you know like it takes a lot of humility to go through that journey to put yourself out there to raise capital and you've got to really look at how you show up in those meetings and reflect and refine and just own where you know you may have given a fast answer that you didn't think through. And you got to own that for yourself. And you got to continue to improve that on your journey.

22:30Jesse Baruch:And, and know that, again, if Shark Tank is your frame of reference for what a pitch looks like, now what I know is that Shark Tank pitch has been rehearsed for six months.

22:45Jesse Baruch:And, you know, and so in order to get that level of practice and rehearsal, outside of the container of like a TV show, you're gonna have to do that in real life. And rather than have that producer sit there and give you feedback and ask you questions, you're going to have to figure out what that container looks like in the real world. And you bring up a really great word there, which is a producer, because to to be a business operator is really to be a producer of of the show, of your product, of the marketing.

23:22and I think we all assume, you know, watching kind of like Hollywood play out, that's the place where we associate production, you know, most closely usually. And you know how many months and years goes into like making a movie and how much money goes into it and how many notes and how many takes, right? Like there's takes and retakes and retakes and there's like a director and building a business, building a line of products is so similar. It is a production and you've got to have the cast of characters and you've got to have the right scripts and you've got to have like, you know, the right film to put it on.

23:57And unless those components come into play together, you've got to flop. So I don't know that the metaphor game is, I don't know that I'm bringing up anything that like isn't terribly obvious here, but if you see yourself as a producer in the way that a filmmaker might see themselves as a producer. I think it gives you permission to experiment and to do double takes.

24:22Jesse Baruch:And to get to the place where it becomes play, right? To where probably not unlike on a film set or in a Hollywood production that the actors are playing, right? They're playing a role. And so to get that, like to get the jitters out and to get enough practice to be able to show up and, and play with the, you know, play the game of business. And you have to take the business seriously, but I think you have to get to a place where you don't take yourself too seriously. So it allows for that learning journey to happen where, you know, you can go through and mess it up 1000 times. And in the pursuit of trying to figure out and get it right and refine Find your own character in the story that you're building and not be afraid to put yourself out there, fail, get it wrong, and then just keep rehearsing, keep practicing.

25:19Yeah. One of the things that was a huge unlock for me was shortening the amount of time in between messing up and getting permission for a retake. And shortening it enough so that now I'll do it within the same conversation. So here's like a, you know, one of my big takeaways from pitching. You go through a pitch, you have those notes for yourself, you mess it up and you're like, oh my gosh, I'm never going to get another chance with this person, which might be true. So how do you counteract that? Like you just have to own it in the moment, you know, and the more real and humble you are in a moment like that where you're like, oh my gosh, okay, like I totally, that is not what I meant to say.

26:06what I meant to say was, or let me reframe that, or, or even just being like really authentic with your emotions. Like there've been a couple of moments when I was pitching where I'm like, you know what? I'm like really nervous right now. Like I'm feeling it. Are you feeling it? And I would just turn it into like this game, this moment of like more relationship building and being vulnerable and like unlocking some of that vulnerability, which Shark Tank does not show, right? Like television does not show. It just shows the final take. Um, and the final take that's been like rehearsed time and again.