How Ithaca Hummus Scaled to $50M Without Venture Capital? Mike Gelb with Chris Kirby | Consumer VC

0:00I think I realized I didn't want to spend my life inside of someone else's vision. I decided to start a farmer's market hummus stand at the Ithaca Farmer's Market in order to get my arms around like some personal demons that I was battling. You are not walking by me without either having a sample or getting absolutely harassed. You couldn't make it better at home if you tried. Product's great. This guy's kind of crazy, but the growth is there. So if a batch isn't right, we throw it away. I do not want to be a professional fundraiser. Once you raise money, you can't put the toothpaste back in the tube.

0:35Now you're on someone else's timeline, 24 hours at a time. The product is the entry fee, but it's not the whole game. Hi, I'm Mike Gelb, and this is Consumer VC, where we talk about what it takes to invest in and build scalable consumer businesses. If you're enjoying the show, hit that subscribe button. It helps more folks discover these conversations. And sign up for the newsletter at theconsumervc.com. I send a weekly roundup of the latest consumer deals, trends, and product expansions. Plus, you'll get the first access to new episodes. Today on the show, I am delighted to have Chris Kirby, who is the founder of Ithaca Hummus.

1:13Ithaca Hummus is a premium brand known for its super fresh, clean label approach to hummus. There's this saying I love, go slow to go fast. And when I think about that, I think about Chris and Ithaca's journey. They spent years thoughtfully expanding, moving slowly, but on purpose until they were ready to hit the gas. And this year, they're on track to hit 50 million revenue for 2025, which is incredible. We're going to get into how they did it. Also, how they did it without raising traditional venture and raising private equity and some of the strategies that helped them grow on their own terms.

1:50But before we have Chris on and before we get into it, I want to tell you about our presenting sponsor, High Beam. With High Beam, you can get the credit you need to stay ahead. With tariffs rising and cash flow tighter than ever, High Beam gives brands access to flexible credit lines and cards built around their cash cycle. For more information, check out highbeam.co. And lastly, a quick disclaimer before we get into it, all content on this show is for informational and entertainment purposes only, and nothing here should be considered investment advice. Now, without further ado, let's get into it.

2:26Here's Chris. Chris, thank you so much for your time. How are you doing? I am doing great. It's a beautiful afternoon here in Raleigh, North Carolina. Doing awesome. Love to hear it. It's also beautiful here in LA. I will be honest. I'm very lucky. It's usually pretty beautiful here in LA, but let's get into it. Why don't start first the early part of your career? I think the first five, 10 years or so, you were in the restaurant industry, if not mistaken. Why did you want to enter the restaurant industry? And is the bear, if you've seen the bear, anything like the real thing? Okay. All right.

3:05So two-parter there. Okay. I got into the restaurant industry. I mean, it was my first job. You turn 14, 15, you start to want stuff, right? Like I want that thing. So your parents are like, go get a job. And so a restaurant was just like where I could get hired. I got a job washing dishes at a local restaurant where I grew up. And that was hot. It was loud. It was chaotic. But for some reason, that energy just spoke to me. So I also loved the way that in a restaurant, you're exposed to all these different parts of a business. If you work at a manufacturer or you work in sales, you are only exposed to one silo of the company.

3:57Whereas in a restaurant, you see it all from like purchasing raw materials, manufacturing, if you will, sales, customer service, everything is right there for you. And I've always had this entrepreneurial itch. And I think I also liked what a restaurant did for me in that sense as well. So when I graduated high school, I just decided to keep rolling with it. I went to culinary school and then I spent five or six years going and touring around the country working in different fine dining restaurants. So, you know, the bear, honestly, painfully accurate, I have to say. The anxiety, that relentless pressure, the unspoken hierarchy that's going on in there, it really captures the emotional intensity of the back of the house better than anything I've ever seen.

4:53But I say painfully because they do a really good job, but they have to condense it down into these hour-long episodes. So they almost overdo it in some cases, which I'm a little bit of a critic of that. But overall, I say it's pretty accurate. That's good to know. And that sounds like hell. um sounds very very tough and and challenging um why well with that being said why make why make for me like when i was a teenager um uh for me it was camp counseling that's what i did um so i didn't work at a restaurant i just did uh summer camp counseling but um uh but um definitely probably could have um throughout the school year um why why make the transition going from the restaurant industry to hummus and to the wonderful world and maybe equally painful world of CPG?

5:52Yeah, it's just as painful. It's just not like every night, every weekend, every holiday, but everything else is just as emotionally draining at times. But I reached a point where professionally, I think I realized I didn't want to spend my life inside of someone else's vision. And personally, you know, the restaurant world is very difficult on a person, especially a person like me, who's, you know, I've struggled with alcohol abuse, drug and alcohol abused my whole life. And, and, and I really needed to like step away from, from that, uh, in order to get my arms around like some personal demons that I was battling.

6:43So I did a full one 80. I was living in Austin, Texas, and I decided to move back to Maryland in with my parents. I went to community college for one year, um, and studied, you know, just business because at the, At that point in time, I only had a I had an associate's degree in culinary arts. And then I started applying to like university schools. I got into the hotel school at Cornell and I went to Ithaca and was just absolutely shocked to find that a town like Ithaca did not have a local hummus company. And I was 26. Keep in mind at this time, going back with kids who are getting their bachelor's degree in undergrad.

7:30So I knew that I had to do something with my time besides like, you know, party and do things that the 18 to 21 year olds were doing. So I decided to start a farmer's market hummus stand at the Ithaca farmer's market. Was part of the reason leaving the restaurant was just also the restaurant industry? Was that also like a light because of the lifestyle as well? Totally. Being up late and everything like that? Absolutely. It was a lifestyle change that I needed. And I think when I first got into cooking and culinary school and restaurants, my dream was to one day own my own restaurant. But because of how tough that was just for me personally as a human, I don't think I ever would have gotten there because I just was not in a good place.

8:24Why did it shock you when you went to Ithaca that there was not a local hummus there? Ithaca is a town, a very small town in upstate agricultural New York. It's got a bustling farmer's market full of local food vendors and two major universities, a college and a university there. So it's a progressive town. It's an agricultural town. I haven't been to, I don't think a single farmer's market since that didn't have a hummus stand. It's just like the, you know, typical, like you would just expect to find that there. Right. And so when I went on my first trip to the Ithaca farmer's market, I was, I was like, there's gotta be a hummus company.

9:16It was kind of this idea I had in the back of my head because I knew I could start it without a lot of money. Um, but I went there half expecting to find a hummus company. And, And when I didn't, I was like, okay, this is it. This is what I'm going to do as a project while I'm in school. Got it. And so talk to me about those first moments when it came to actually starting Ithaca. Did you first of all, I mean, I imagine because you were in Ithaca, that's where the name comes from. But talk to me a little bit about how you actually got off the ground and actually started selling in that farmer's market and actually being the only hummus brand in the farmer's market?

10:01I went through all the normal, you got to get a license and permitting. I had to find a kitchen. I've always been very scrappy. I found a kitchen that I rented for$250 a month. It was a summer camp that wasn't being used. It was the perfect thing. um packaging was just like deli cups and um these plastic bands that were heat activated with like a hair dryer i used ice cream scoops to like scoop the product out and weigh it on little scales and then um so i so i would i would go to school during the day and i would go to the kitchen at night make hummus all week and then on saturdays and sundays i would lug these massive coolers full of ice and hummus to the farmer's market.

10:51And the key to those first initial few markets was to not let anyone pass by my stand without absolutely forcing them to try a sample. You were not walking by me without either having a sample or getting absolutely harassed. And I'm not embarrassed to say that. Because after a while, people would try it, word got out. and after a few weeks like we just i i wasn't able to make enough any week to like make it through the entire market i don't think ever what do you think was different about your hummus was it was it that people people had to say no really loudly or scream if they weren't going to try it because because you because because you're pretty much we're saying you have to try this hummus and got people, everyone that to walk by.

11:46Do you think it was the salesmanship? That's what I'm trying to say. Or do you think it was the actual flavors there that people really kind of went for and were really impressed with? There's no doubt that the salesmanship got them in the door. But once they came inside, the taste is what kept them. And, you know, I was making it like two miles away and I was squeezing lemons by hand and, you know, fresh peeled garlic. Like you couldn't make it better at home if you tried. And at that time and still today, like you go to the grocery store and you buy hummus and it's just this super underwhelming experience, in my opinion.

12:32And so that's what people had as a basis for comparison. And then they tried this product that I had made in a local kitchen, all fresh ingredients, freshly whipped up and fluffy. And they were like, wow, this is like totally changes my perception of what hummus should actually be like. so when you when you started seeing that word word were kind of spreading out this was still like a side project just hey i'm a student i'm gonna i'm gonna try this just as a way to maybe pay some of my bills or even just you know just to kind of experiment and see was was there a point i mean obviously i know there was a point but talk to me a little bit about that shift in mindset maybe that you had to do that this is more of just like a side gig or something I'm doing while in school versus something that actually, okay, there's maybe a real opportunity here.

13:31There's something very powerful about going to a farmer's market and standing there in front of thousands of people who just like pass their energy and excitement for something that you made onto you. Like it's a human to human thing. And it just filled me up with this electrifying energy that allowed me to do things that were almost like defied logic. Like I could just stay up and make this product all night and go to school the next day. I felt like superhuman. And I didn't want that feeling to stop. So I was like, how do I, maybe it's just the way that my messed up brain works, but I was like, how do I just make sure this never stops and keep getting more and more and more of it?

14:22And the way to do that was to grow. And that was the growth process was just a one foot in front of the other incremental. I went from the farmer's market to the local co-op to 20 local co-ops to a distributor and so on. We can talk about the growth more if you want to. But it just happened quickly. I don't even want to say it happened slow and then it happened fast. It just happened. I was there and it was like, okay, this is working. I don't want it to stop. And why Ithaca, the brand? Why call it Ithaca? I mean, I know that that is where you were, where he started the business. But why did it make sense to name it after a town?

15:10Well, in some ways, it doesn't, which you might be alluding to. I mean, I think if you pick up the book Branding for Dummies, like somewhere in the first chapter, it's like, do not name your brand after something that already has a meaning, like a town, because you're not going to be able to trademark that very easily. And so it was very difficult and is still a battle to get like the, all the full trademark rights that we would like to have as a brand for the word Ithaca in the hummus category. but I don't think I would do it any differently because it's become a part of our DNA.

15:50And it's memorable, you know, like I feel like, I don't know this, but if I had to guess like one in three people that I meet have some connection to the town of Ithaca. And when people ask the question that you're asking right now, it's like a perfect segue and gives us a chance to tell our story. So it's worked out. Even though it's been challenging in some ways, I don't think I would do it any differently. Yeah. I mean, I could totally, totally understand why with that name, then you can dive into the story quite seamlessly because obviously that's where you started the business. After you graduated Cornell, was the plan then, let's go full-time with Ithaca Hummus?

16:45Or did you still kind of consider it, this is just kind of a side project. I'm going to kind of see where this goes, but I want to have another job as well. I did, while I was in school, I did take an internship one summer out in Santa Monica, had a restaurant called Veggie Grill. So if you may know it, yeah. If I, I mean, thinking back and like thinking that, like, I guess maybe I was still toying with the idea of like, well, what else could I do with, because I knew that if I went all in on Ithaca, like this was it. Like, I'm not going to go and have some other career that I never anticipated I could have before I got to Cornell because this was my chance to do that.

17:37But certainly by the time I was ready to graduate, I knew that Ithaca was going to be my life. Got it. No, that's awesome that you were able to afterwards then dive into it full time. Once you graduated and realized that Ithaca was the brand that you were building, the brand that was not a side gig, the brand that was the main event, how then did you approach scaling? I know you talked about going into a co-op and then going to 20 co-ops and then getting a distributor. How did some of these relationships come about? I'm sure they stemmed originally from the farmer's market, But how did you kind of approach the early growth for Ithaca when it comes to getting into a lot more doors?

18:31Well, I will say that we didn't grow doors very quickly in the first five years. I think we were under 2 ,000 doors the whole time.

18:45And why was that? I would say the biggest reason is because the product was so perishable. It was too big of a risk to take on some massive account and ship the product across the country because it only had a 21-day shelf life at best. Um, so I was forced to figure out how to, um, monetize the region that I was in, max out the max out the monetization, uh, capacity of my region, right? Fancy, fancy way of saying like, I needed to stay focused locally. Um, and the way I did that initially was I went to see a local natural foods distributor. And I asked them for a list of their top accounts in the region.

19:43And I said, I know that I'm not going to... You're going to lose money if you try to put my product on your truck and go out and sell it for me. You're not a sales organization. You're a distributor. You take products to places. But in order for me... That's my goal, eventually. And in order for me to get to that point, I'm willing to go out and do the work and sell into all of the accounts that I would need in order for my product to make sense on your truck. So I started just by dialing down that list, getting in my car, going to visit local food stores, co-ops, coffee shops, whatever, wineries, whatever it was in that region.

20:26And eventually I got like 20, 25 of them. And I went back to the distributor and I said, hey, here's what the monthly revenue that you could make off our product looks like. And they started carrying Ithaca on their trucks. And then I would do ride-alongs with their reps and go sell to all the other customers that I didn't hit initially and just kind of built it like that. So you weren't using a broker. You were actually going out and doing the selling yourself and to the actual stores. Oh, yeah, yeah, yeah. We didn't use a broker for probably the first six or seven years. Wow, wow. Once you got in store, this is what I've heard is the toughest thing.

21:16It's not so much getting into the store. It's actually staying on shelf and moving product and selling through. When you were getting in through, I know that you may have said you were kind of riding the trucks, doing the checks, I'd imagine. What was your strategy when it comes to selling through to make sure that your product stays on shelf and to have the velocities that it needed? Well, that was one of the advantages of being the founder and going out and selling these accounts personally, sitting down with the person who physically stocks that case and tasting the product with them and telling them my story was that it armed them with the information that they needed to turn around and sell it to their customers.

22:01And we're also talking about retailers that are based in their community, co-ops, natural food stores. They have a lot of inherent trust built up with their customers. And so I was able to make one-on-one connections with a lot of these small retailers. And they were a big part in helping to tell the story and spread the word and the excitement about this new great product that they just got on their shelf. And they helped with allowing people to taste it and telling the story.

22:40Sampling has always been... We have always done as much sampling as we could afford and has made sense. Today, we have 20 plus or minus brand ambassadors that work actually for Ithaca Hummus at any given time. We do focus them on specific channels and retailers, but sampling is big. And then there's also just how the game works. Promotions, it's like a dirty word in, I feel like, emerging brands. You don't want to promote. And there are a lot of people out there that say you shouldn't have to... It's kind of a faux pas in the early emerging consumer brand world, I guess you could say. But you need to promote your product.

23:31If you're confident in the repeat, you find ways to invest in the trial. Storytelling, demos and sampling, and promotions are probably the three biggest tactics that we used and still do. And then also doing sampling as well? Yes. A lot of sampling. Cool. Also packaging. I think packaging is the biggest asset that you can invest in as an emerging brand. And we didn't always have it just right. But I feel like our packaging works really hard for us today. Definitely want to dive into packaging. But first, what obviously at this point when you're into these co-ops, or I would think you're at this point, we got into 20 different co-ops and you're expanding beyond that.

24:28What was that process like finding the right co-man to also support you and your business so it's not just you doing this all alone? so yeah so we went from 20 co-ops to regional distributor then we brought on Wegmans and grew kind of one store at a time with Wegmans over years same thing with Whole Foods in the northeast and then we were ready for a co-man took years okay and I want to five six years before we were even ready to consider a co-manufacturer but once we were we were probably doing about a million dollars in business a year, which was tiny for the co-packer that we ended up working with.

25:12But it was really important to me as a chef and the founder that I found a co-packer who, number one, could replicate the quality. I was not willing to make any concessions when it came to our process or the quality of the product. Number two, there are things that a co-packer can do for you that give you an outsized advantage as a small company? Sometimes, not all the times. But we were talking about cash flow before we hopped on here. And our co-packer, after about a year of working with us, became a strategic investor in Ithaca. And with that investment came some terms in our relationship that allowed us to hold onto our cash for longer.

26:08So we didn't have to pay for any inventory, didn't invest in raw materials whatsoever. They invoice us for finished goods once they're made and packaged and in cases and on pallets. they invoice us with 60-day terms. And then we turn around and sell it on 30-day terms to the first receiver, which gave us a 30-day window of cashflow. Does that make sense? Yeah, totally. So you actually have like a negative cashflow conversion cycle of that, if I'm understanding correctly. Exactly, exactly. And that was a big part of the strategic relationship between us and our co-packer was, yes, we'll sell you equity and we'll take some capital for sure.

26:55But we also need... Better terms. Yeah, we need better terms. We need better terms in our relationship because we don't want to have to go back out and raise money when we get some big account. So many brands have to do that. They've got to go fundraise just to access Walmart or Target because it's so capital intensive to even entertain a piece of business of that size that they can't do it without outside funding. What do you think that the co-man saw in you all to actually put equity into your company? Well, the first year that we started working with them, we went from a million in revenue to three and a half million.

27:32So that was it. They were like, okay, yeah, you came to us. You had all these demands on we got to squeeze fresh lemon juice for you. We have to cool down the chickpeas just right before we blend it and all these little quirky things. And they accommodated it. Yeah. Yeah, they were like, this guy's a nut. You know, we make a bajillion jars of pasta sauce in a minute. And this guy wants to sit at us and, you know, one by one at a time, polish off each tissue. But they did it. And so I think they had a little bit of confirmation bias working for them, working for me, really. And then we went from a million to three and a half million.

28:12They're like, OK, product's great. This guy's kind of crazy, but the growth is there. So let's get in on the action. For you, was it, obviously you're now at a lot bigger than either of those numbers, but for you, how are you thinking about capacity from your standpoint? Because if a co-man invests in your company, will they have enough capacity that they can actually support you as you grow even far beyond seven figures? Yeah, I feel because I work with such an amazing co-packer. I feel almost underqualified to even comment on that because, you know, the name of the co-packer, by the way, is Ledestry.

28:56All right. The guy who started it, his name is Giovanni Ledestry. He and I are super tight, have been since the beginning. And what he always tells me to do it to this day is like, just don't stop selling. Sell, sell as much as you can. We will never, you know, we will never have any capacity constraints that we can't fill for you guys. Like he's just, it's such a rare, rare, special relationship. And I almost feel like it's unfair to like tell that story to people who might be listening. And I don't want to mislead anyone to think that that's normal. It's not normal. You know, normally you work with a co-packer who wants you to fund all your raw materials.

29:38They've got to show up six weeks before the schedule, before they'll even put you on the schedule. Then you get like four runs a year. so you sit on all this finished goods. Ledestry, they do it our way. They fund everything and they make product five days a week, every week, all week. We're just ching, ching, ching, ching, ching, constantly running. It's always been that way. Yeah, and that also makes sense because it's perishable and only actually lasts for 21 days. You kind of need to do it like that. You can't really do four runs a year, I'd imagine. You have to do it. You have to actually produce lower quantities but a lot more quickly.

30:15Yes. Very, very difficult to find a fresh manufacturer who can do that for you. Oftentimes what people do is they'll take some of the process and build their own manufacturing. And maybe like we use HPP for our products. So they'll toll out the HPP, but they'll do the manufacturing in-house and do some combination. We've been absolutely blessed that we found Ledestry and they have it all under one roof and they make product every single day. because you seem obsessive about quality if that's fair to say um maybe even a maniac about quality what do you do you have any horror stories when it comes to actually working um um just just building the product where the product actually wasn't quite right or well the product didn't go quite quite quite um quite where you thought it could it could even be in product innovation for example when you're when you're when you're when you're trying to launch a new product yeah i mean if a batch isn't right we throw it away sucks plain and simple yeah yeah straight up if it doesn't taste right it doesn't get sold and um that was really painful in the beginning because you know we made there's money there's a lot of money to lose um i would say the bigger horror story though for me was just I was my I was self-manufacturing for that first six years and man I had to learn how to use packaging equipment and we went from like filling with a ice cream scoop to using like a filling line that I bought and when that filling line went down we couldn't go back to the old we couldn't go back to the old ice cream scoop because the way that it was sealed had to happen on the machine.