🧠 WILL NITZE // IQBAR FOUNDER & CEO

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 that fail from brands that scale. ran out i drank all mine it's really upsetting spindress has like a holiday flavor that's like

0:34Will Nitze:cranberry something at costco have you had that one no i crushed the whatever blood orange and the lime oh yeah those are good the lime is like really limey it is like i'm like salivating just thinking about it it is yeah the cranberry one that ends up being my seasonal favorite it's like the pumpkin spice latte of spindress basically it's like they give you just enough for just a couple of months and then the rest of the year you're thinking about it all right well welcome to commerce chaos i'm so excited to talk to you about iq bar and uh we have a shared interest not only in gallery walls but also in kickstarter and of course like you know like all good kickstarter butterflies you've graduated and major retailers follow costco walmart target but you've got like a good balance business from what I could see.

1:26And yeah, so I'd just love to chat about your approach to growth. And maybe we'll start with the Kickstarter story. I love a good Kickstarter story.

1:34Will Nitze:Sure. Yeah. And I don't even know what the state of Kickstarter is these days, but because this was back in... That's a whole other podcast. Yeah. Yeah. But at the time, it was, and it wasn't even that cool when I, like there was a period where it was like really like novel and cool and kind of a different way to start a company. I did it in December 17 through Jan 18. And by then it was like, I think there had been a whole series of like scammy campaigns. And it was so like PR wouldn't cover Kickstarter campaigns because there had been a bunch that didn't deliver. And so it wasn't even that cool when I did it.

2:11Will Nitze:But I have no idea where it is now. But yes, that is that is how I decided to start it. And the basic idea there was I had no money and I knew I was going to raise money, right? Because you might just say, well, go raise money. But I wanted to justify a pretty decent valuation. I don't know, that's a relative term. I wanted to justify a$4 million valuation for a company that didn't exist and like a product that didn't exist. And that's kind of hard to do in CPG unless you have some sort of traction. And so my idea was I'll create that traction via Kickstarter and then I'll go raise money on the back of that.

2:47Will Nitze:So that's a common misconception I think a lot of people have with Kickstarter is like, oh, yeah, you just fund operations through your Kickstarter proceeds. And that's not at all what it was for us. And I don't think most people. It's really just a proof of concept and, you know, semblance of product market fit. Yeah. Well, and to the extent that you run a Kickstarter that's really successful, all of a sudden you're fundraising from your customers, which is also known as sales, which is great. But you're so right. Like you don't, you know, there's lots of good reasons for doing it. And I think one of the things that's been the saddest for me in the sort of like post heyday era of Kickstarter is that that tool for discovery and for early customer contact and feedback is it doesn't work as well anymore.

3:33And I loved using it in the way that you described. I never went for a round of venture funding after any of the brands that I ran Kickstarters for but um like they were effectively bootstrapped off of that and sales but it's such a great tool for that and such a great way to like meet people early on and just start to understand the market

3:54Will Nitze:yeah and so there's there's a couple different ways to start a food and bed company or manufacturing any product and another reason we used uh kickstarter was i didn't want to go like some people will make a product in their kitchen and then they'll make a hundred of it and then they'll make a thousand of it and then they'll be like okay i need to move to a commercial kitchen and then they'll make five thousand of it and eventually they'll say cool i can move to a actual like manufacturing facility or plant a co-packer and i wanted to skip those first several steps and i just wanted to go straight to a co-packer like i wanted to make product on a full-fledged production line on day one and there just are moqs there are minimum orders that you have to make and that's like on the low low low low end call it thousand units right so that was a helpful level where i was like okay i need you to sell 25 000 units um at a time and by the way this is an expirable product like it's not like earbuds that could sit in a warehouse and i sell it down over 18 months like i i need to i need a lot of demand quickly yeah so that that was the other variable because other people have done it differently they have done it that like slower growth way but i just wanted to understand like is this a good idea because that was the other thing there was a chance that it just failed and it's like okay that sucks but at least i emphatically know this is a bad idea and then i can move on yeah well it's interesting when it because when a cpg product fails like it's ultimately like didn't taste good right And like the packaging, right?

5:33There's, yes, you could misformulate something and then have that as the byproduct. Or you can have like a totally dead production run is a really bad byproduct of that failure. But in general, it's like a higher bar, but a lower bar, because you've got to have a lot of these proof points to get the traction that you need because the MLQs are so high. On the other hand, there is on a relative basis, still an investment, but on a relative basis, a lower investment in, you know, the hard trappings of manufacturing,$150 ,000 in tooling. If a part doesn't fit or it breaks or your spot buys for the like critical transistor in the thing aren't there, like you kind of can get to product easier in a way.

6:20Proof of concept, like you're describing, you could do that in your kitchen. You just wanted to jump to manufacturing. And So I wonder how how how are you meditating about failure before you started?

6:31Will Nitze:Yeah, I mean, and by the way, it's almost like more of a proof of concept of you as an entrepreneur. Like that's terrifying. Well, it just because the irony is the product's going to iterate and change so much anyway that actually your end product won't be recognizable relative to your beginning product. So it's actually kind of a misnomer that it's that it's a proof of concept of the product because that won't be the product. It's a proof of concept of you like competent enough to run a Kickstarter, which is like a microcosm of a broader sales organization and manufacturing organizations. Like, but that's part of it.

7:09Will Nitze:It's like, do I have what it takes to do something hard? but yeah I mean like the I'm I think the failure thing is just like pure human psychology and it's just like for me I do really well if I put myself between a rock and a hard place and I just like can't fail like it's so devastating to fail that it's just never even an option where like I quit my job before we ran the Kickstarter so it actually had to work and I was willing to do like absolutely anything like shameful things to make it work. And I have I've told this story on a couple other podcasts, but I might as well tell it here. It's a it's a decent one.

7:45Will Nitze:So I went to Harvard undergrad and I was living in Boston after college. And at Harvard, they have these things called red books. And you go into the library, the Harvard library, and it's every alumnus's details. It's like Will Netza and then my phone number and my email. It actually has contact information for each person it has every year so it has class of 1980 class of nine you know whatever and so i i actually just went every day after work i had a job at the time and i took pictures of every page of every red book for like decades and then i found this software you wear facebook yeah well it's like a pathetic version of the facebook origin story perhaps the protein bar version so and then i I found this software that like could extract the email address from all these images, like text image conversion or image to text conversion.

8:39Will Nitze:And so I got like, you know, 15 ,000 emails, something, some crazy amount of emails. And then I got my boss went to Harvard Business School and he just like gave me his login against his better judgment. And I was able to get all the first and last. They don't give you the email address, but it's the same convention. It's like first dot last at like HBS and then the class year like that or whatever. And I figured out a way to get all the first and last names. If you go to their advanced search, you can just do every permutation of like interested in foreign relations and plays tennis, you know, like and then like and is from Florida or whatever and just do every permutation and then de-dupe the whole list.

9:20Will Nitze:And that was like 80 ,000 email addresses. And then, and the reason I did like the Harvard undergrad and Harvard business school, it was, it was just like a shameless, like, Hey, we're, you know, we have this one little connection. I was an undergrad class of 14, like as if that mattered, like who cares? But that was like my one little linkage. And then I made a MailChimp account. I just blasted these people. And I'm sure this is like not doable anymore. I don't even think it's legal to publish this podcast now. Well, I've already told the, if Harvard was going to come after me, they would have done it already.

9:58Will Nitze:And this was like eight years ago. So, I mean, there was no opt-in. I also used my alumni email address because I knew it would ding the like domain score or whatever. And just ruthlessly spammed people. And of course, got marked as spam a bunch. And then MailChimp shut down my account. And then I feigned ignorance. So I was like, oh, I didn't know. And then they said, okay, we'll reinstate it, but don't do it again. And then, of course, the next day I sent another 10 ,000 emails. But by the time we got shut down a second time, we had already gotten it all out. And I think we drove like$1 ,000 of sales just through that.

10:36Will Nitze:And that was free. That was the other kind of key thing is you can run paid ads and whatnot, but it's all going to cost money. And I was interested in things that would drive a lot of sales and be free. And there just aren't that many of those. So anyway, point being like I did shameless things to to make that work. And were you driving those people to your Kickstarter or or by then you were launched and that was going to your site? No, that was all to the Kickstarter. I was all the Kickstarter. Yeah. And then we rolled out a site there shortly thereafter. And some percentage of the Kickstarter backers re-bought on our site.

11:10Will Nitze:And then we were now we're moving. And then we started running paid ads. But it's like things that work for D2C don't really work for Kickstarter. or like, no, it's very, very hard to convert someone on a Facebook ad of, hey, I might buy this thing that's kind of pricey and I won't give it to you for six months. That's not a good selling point. It's a miracle, the whole crowdfunding thing. I don't know why anyone backs anything. It's just crazy to me. But thank God they do. But they did. And they do. Yeah, that's amazing. OK, so I mean, the best scrappy beginner story of all time. And fast forward to, I want to hear, I don't know if you're going to, I don't know if you're going to humor me, but like, what's a shameless story, but at like the, at the like, now we're in retail level.

11:55Like what's that, that version, but, but for like a$2 million.

11:59Will Nitze:I mean, there were definitely moments early on where we would, shall we say, influence pilots. Yeah, you have a pilot, X number of stores, 10 stores, and let's see how you do. it's like well I know how I'm gonna do because I'm gonna make sure I do well you know so yeah um there are definitely some moments like that early early on when we launched and I have another target story when we launched in target I went to my local target and my husband was with me we worked together so he's like he knows exactly what the unit economics are and I was like we should buy all of these and he's like are you insane I'm like absolutely not we should buy all of them he wouldn't let me do it he's yeah well think of the payoff i mean it's like why how could you not and then that leads to a x number a million dollars po it's like yeah you'd be a fool not to like unless of course you thought put you two in touch yeah unless you thought we will fail on the back end right so like it is true that you don't want to do something that then leads to a bigger outcome and then that bigger outcome waxy in the face in some way like because you're going and get charged back or like bad stuff's going to happen.

13:10Will Nitze:So you have to believe, oh, this is going to work in the event that I do get this distribution opportunity. But yeah, in terms of getting the opportunity in the first place. Yeah. I mean, we'll we will do almost anything. Almost anything. I brought my baby to a target meeting. Yeah. Oh, yeah. Or was that questionable choice? We did get the PO though. But now I'll never know. Was it the product or the kit? That doesn't matter. take the win i'll live with that mystery okay so so we were we were talking about supply chain at the beginning and sort of like skipping skipping the steps between making a batch of something in your kitchen and and working with a co-man and i want to ask a really early stage question around the original formulation because you've kind of got you've got this idea right and and the ideas around you know mind mind body protein i'm probably totally botching it but somewhere not Not even protein.

14:00Will Nitze:It was just brain food. That was the original idea. Like, oh, what if we made a bar out of things that were highest in compounds shown to benefit the brain? Like, that was it. So this isn't like you're making granola in your kitchen and like your neighborhood loves it. So they tell you to like go make more granola and then you should sell it at the trade, you know, at the farmer's market. This is like we have, we're convicted that there is a demand for brain nutrition that's being unmet in the market? Is it kind of coming from more that paradigm? And then you start to formulate from there? Yeah.

14:34Will Nitze:And predicted is a generous term. I would say I had this idea. I had zero data that it was. I mean, there was certainly demand for your brain to work better via consumption of whatever, bulletproof coffee or supplements or whatever. But like, of course, people want their brain to work better. There is zero data that anyone wanted that out of a protein bar or a bar, a nutrition bar. I mean, because like function, one of the main things I've learned is function is extremely form factor dependent. So like, for instance, no one likes to eat caffeine, but that's kind of weird. Like, why? Like, everyone likes caffeine.

15:14Will Nitze:Like, why do we just just drink caffeine? I don't know why, but that just is what it is. And if you try to fight that, like you'll almost certainly lose. So it's just, it is very like function is very form factor dependent. So the brain thing very well, the case could have been, and actually to some degree, the case was people do prefer that via supplementation and drinks versus ready to eat food. But again, that's just like, that was like our starting point. And then we, yeah, iterated many times on there. So you formulate, you skip to a command, right? And then you roll it all the way back during COVID.

15:51Tell us that story.

15:52Will Nitze:What do you mean roll it all back? Well, like you're put, you pulled, at least as I understand it, you're kind of, you pulled a bunch of supply chain in-house. Yes. Well, yeah. So that, and that was totally out of necessity. So that, at that point we were doing, I think million dollars that year, which was like, call it whatever, 5 million bars, 5, 6 million bars. So, you know, not low volume, but not super high volume. And at the time we were turnkey. So, you know, turnkey is basically just your co-packer does everything. They buy all the inputs and they make the thing. And then they send you a bill for the cost per bar times the number of the bars they made you for you.

16:30Will Nitze:And inherent to that is, you know, almost always a material markup fee, meaning they're making a margin on the almonds they buy in addition to making a margin on the labor to produce that finished good. So, I mean, that's like, I think most people do do that. And it's definitely nice from an administrative standpoint because you just do less. But the downside is when there's a global pandemic, you're absolutely screwed. And the lady who, you know, buys the stuff, who like tapes with one finger, you know, and is not going to do what it takes to get almonds on a rail car tomorrow when you desperately need them by Friday.

17:14Will Nitze:Like that is just not going to happen. And when there's a global pandemic, it just so happens that there's a strike at the rail yard and you can't get the almonds on the rail car and 10 other things happen. Like it was truly the most gnarly operational experience in my life by far. It was just you couldn't get anything. You can get cardboard, you know, things you assume. How could you ever not get that? You couldn't get it. And so it was just such a crisis moment that we were like, okay, we just have to take everything in house because we need to be like making stuff happen ourself. Because if we can't, if you can't make product, you don't have a company.

17:52Will Nitze:So, and the other thing is like, if you have 50 inputs, all it takes is not having one and you can't make the thing. So you have to, you have to shoot lights out. You have to get all 50 there. So yeah, it was just, we did it because we had to. Now, it turns out that that was the best thing that could have happened to us long term because we were forced to get really, really good at the things that really no one focuses on in CPG or at least are very under focused on, in my opinion, which is supply chain and manufacturing. Like, it sounds funny because we, you know, CPG inherently are manufacturing stuff.

18:29Will Nitze:But people are like, oh, yeah, let me give the idea to this third party and then they'll make it. It's like, no, you really have to just be there, tell them exactly how to make it, iterate with them. Like it's as if you're making it and and and there's 10 ways to slice and dice your supply chain. And that's the difference of like 20 points of margin or, you know, crazy swings in margin. So we not only like did what it took to get all the inputs to the facilities, but also we learned how to get better pricing, how to contract on things, how to mitigate risk. you in other ways how to how to ship everything in truckloads versus ltl like that there's so many efficiencies we drive we're still and still today we're driving the efficiency i mean you can order an input in a pail you can also import you can also order it in a tote and you can also order it in a drum right and then you can put those things in different configurations on a truck or you can put them on a rail car right and then at the co-packer level you can like pump those things in or you can dump them in.

19:31Will Nitze:Like most people are like, oh, you just your almond butter is almond butter. Right. And it's like, no, actually, there's 10 different ways to do that. Yeah. I mean, for me, speaking of my own book, that's like the fun of it all. It's just like this infinite Lego game of like, how can I how can I like configure all of these different inputs to get the right output? When do I accept that the output should change over time versus like dig in that I don't want it to change over time? You know, I think that folks that outsource all of that miss a lot of the terrifying joy in building because it is terror.

20:05I mean, having to manage that many inputs is really hard. Probably takes like a really big college degree.

20:12Will Nitze:Actually, none of it's hard. Like none of it's technically hard. It's all just. Yeah. Yeah. It's complex and it's hard in aggregate. Yes. And they're really right. It's only hard in aggregate. Like making phone calls, a phone call is really easy and a lot of supply chain is phone calls even today it's phone calls and emails and talking to people and well also a lot i think a lot of people don't actually know what's possible so they don't actually know what levers they can pull like the pale versus drum versus tote thing right i actually think a lot of people myself included until i did know it just didn't just didn't know that that was even a thing because they're like oh i was quoted in pails, like then I buy in pails.

20:55Will Nitze:I wouldn't even know to be like, oh, could I get that in a drum? You know, could I get that in a tote? Like until someone just until I think, you know, we were at the co-packer and the co-packer was like, you know, you could get these in totes. And I was like, whoa, like I didn't, that wasn't even on my radar. So a lot of it's just, I think entrepreneurs don't actually know the menu of possibilities to drive efficiencies. Yeah. I mean, that was true for me too, building my own tech stack. Like I just didn't know the menu. I don't have the words for this. I just know that I need a thing that like, make sure that when you know, a retailer says I want 3000, but not for three months from now, I better not sell that or I better have more coming if I want to sell some of them as like a forecasting tool.

21:38I don't know. Sounds about right to me. But yeah, I think that that so much of this is is really just like starting to understand the vocabulary of it. And to be building in this era is really such a delight because LLMs can provide so much of that. And that when probably early when you were building, and certainly when I was building, because I'm fortunately a little older, like it just, the tools weren't there. When I started, like, I mean, the internet was pretty immature still. And buying stuff was really hard. And my resources were like government documentation. like that's a breeding the whole thing and i think that a better appreciation of just like if you know the words you can make the magic incantation but if you don't have you don't have that you have to have the spell book and if you don't have the spell book it's really hard to be like you know punching your hand through the magical wall of like resistance and by the way i think a lot of

22:34Will Nitze:this stuff is really, really mostly relevant at scale. Like I don't, I think there is such a thing as over optimizing in from the zero to one phase. And, and I just don't think you should like your goal from zero to one is confirm your product market fit and get to scale. And then once you're at scale scale, let's just say means 30 million units a year, which by the way, should roughly coincide with profitability, like turning the corner on that, then that menu presents itself. That menu is actually not really a thing pre-scale. So even if I knew I could buy in drums and, well, they're just not going to sell it to me because I'm just, I'm not that interesting to that vendor and blah, blah, blah.

23:19Will Nitze:And by the way, I shouldn't be focusing on that anyway. I should be focusing on getting to scale. So I think there's a pre and post-scale sort of rubric you should apply to operations and now we're like post scale. And so I think a lot about this stuff, but I'd be lying if I told you I thought a lot about it, you know, in year two, let's say. Yeah. Well, you know, reflecting on sort of what, what I've read about your product strategy, I can, I can make ties down to this part of how your brain works in that, like you've, you're at the intersection of a bunch of different motivations. Maybe I could call them trends, but I don't want to trivialize them, But like consumer needs brain health and plant protein and having a clean label and, you know, keto, which might be a trend, but low sugar, which is certainly like broadly probably the right thing for us.

24:05And like that's less arguable. So you've got like this diverse. I've heard you say that like diversified stock portfolio represented inside the product itself. But what I'm hearing is that that is really probably how your brain works, too, is like you you've got like a multifaceted approach to the right ingredients. ingredients, both at the product level and at the business level.

24:28Will Nitze:Totally. Yeah, I think it's a common misconception about entrepreneurs is that the risk takers were actually risk mitigators for the most part. Like, yes, you take that original binary risk. I'm going to quit my job and do this thing. But from the moment you start, you're actually most of my day is mitigating a risk, which in the primary mechanism to do that is diversifying everything. like so i mean like our company is a platform like we make bars but we also make hydration and coffee and we're moving into a new product line that's going to be huge that's also in the food realm but will further diversify and then there's like diversification at the supply chain level don't just have one supplier of x input have two at least and there's diversification at the manufacturing level and then there's diversification at the fulfillment level and a huge one is channel diversification.

25:21Will Nitze:That being said, you also need, in my experience, to make some big, I would say like the one place where we actually don't try to mitigate risk and we take really, big swings is on retail channels. We take really big swings because the ratio that matters most to us is energy and revenue out. We apply that to everything. How much energy does it take? how much revenue can it spit out? And so ticky tacky, two store chain, whatever, that's a pretty bad energy and revenue out. Whereas a giant retailer, well, that's actually really favorable energy and revenue out, but it's very risky, right? So I would say I mitigate risk in like eight out of 10 areas.